The hotel was founded in 1898 by the Swiss hotelier César Ritz in collaboration with the French chef Auguste Escoffier. The hotel was constructed behind the façade of an eighteenth-century townhouse. It was among the first hotels in Europe to provide an en suite bathroom, electricity, and a telephone for each room. It quickly established a reputation for luxury and attracted a clientele that included royalty, politicians, writers, film stars, and singers. Several of its suites are named in honour of famous guests of the hotel including Coco Chanel, and the cocktail lounge Bar Hemingway pays tribute to writer Ernest Hemingway.

The hotel was renovated from 1980 to 1987 following its purchase by Mohamed Al-Fayed; and again from 2012 to 2016.[1][2] While the hotel has not applied for the 'Palace' distinction from the French ministry of economy, industry and employment,[3] its Suite Impériale has been listed by the French government as a national monument.