The former Princely Palace, a simple Baroque town palace centrally located on Schlossplatz, was built from 1729-1734 on behalf of Prince Günther I of Schwarzburg-Sondershausen. The master builder of this building, originally erected as a Wittumspalais for Günther's wife, Elisabeth Albertine, was the architect Johann Heinrich Hoffmann, master builder of Anhalt-Bernburg and also for Schwarzburg-Sondershausen from 1731/32 to 1733/34.

Even during the lifetime of the princely couple, the Arnstadt palace served to preserve the princely art collections, which still form the basis of the Arnstadt museum collection. Of particular note is Prince Günther I's porcelain collection, most of which can still be admired today in a porcelain and mirror cabinet in its original location.

A total of around 1000 Chinese and Japanese porcelains, mainly from around 1700, are presented here on a total of 763 leaf-like consoles. Meissen porcelain (1st half of the 18th century), which was also collected by Prince Günther I, can also be seen in the rest of the exhibition.

The stables to the west of the building ensemble also house a lapidarium (18th century tombstones, architectural elements from the Neideck ruins, 16th century) and a collection of historic fire extinguishing hand-operated fire engines, which is currently closed due to construction work.