The historical palace is situated at a distance of 8 km from the town on an island in Shipra river. The palace was built by Mandu Rulers in the year 1458. Kailadeh Palace was built in Persian style of architecture. The palace took the brunt of time and huge portion of the palace collapsed. It was then mended by Maharaja Madhav Rao Scindia I in 1920. The palace is set in very calm environment that further adds to the surrounding natural beauty.