Jag Mandir is situated in one of the two natural islands in the Pichola lake (named after the village Picholi nearby), on its southern end. The lake was initially created in the 15th century by a local banjara tribal chieftain for carrying grain across the streams. During the reign of Maharana Udai Singh II, in 1560, the lake was substantially enlarged by constructing dams across two streams. At that time, the Maharana also built the Jag Mandir and the Lake Palace (Jag Niwas Hotel) on islands in the midst of the lake. Udaipur city with its City Palace and other monuments and temples were built on the periphery of the lake. The construction of the palace was started in 1551 by Maharana Amar Singh, continued by Maharana Karan Singh (1620–1628) and finally completed by Maharana Jagat Singh I (1628–1652). It is named as "Jagat Mandir" in honour of the last named Maharana Jagat Singh. The royal family used the palace as a summer resort and pleasure palace for holding parties.  The palace served as a refuge to asylum seekers for one occasion.