The palace's history started in the Middle Ages when a chapel dedicated to Our Lady of Pena was built on the top of the hill above Sintra. According to tradition, construction occurred after an apparition of the Virgin Mary.In 1493, King John II, accompanied by his wife Queen Leonor, made a pilgrimage to the site to fulfill a vow. His successor, King Manuel I, was also very fond of this sanctuary, and ordered the construction of a monastery on this site which was donated to the Order of Saint Jerome. For centuries Pena was a small, quiet place for meditation, housing a maximum of eighteen monks.
In the 18th century the monastery was severely damaged by lightning. However, it was the Great Lisbon Earthquake of 1755, occurring shortly afterwards, that took the heaviest toll on the monastery, reducing it to ruins. Nonetheless, the chapel (and its works of marble and alabaster attributed to Nicolau Chanterene) escaped without significant damage.
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