The Palazzo, commissioned by Prato's merchant Francesco di Marco Datini, was built in 1383 and represents a rare example of late fourteenth century residence frescoed also on the outside. Datini had organised and managed a very wide commercial network, adopting up-to-date administrative systems, thus accumulating a considerable fortune that - having no male heirs - he decided to leave after his death to a charitable institution that for gratitude had the external walls of the palazzo decorated with sixteen scenes from the life of the benefactor by Niccolò Gerini and assistants (the originals are exhibited in the rooms of the State Archive). Around 1390 Datini commissioned to fresco the courtyard and the internal rooms to the most famous artists of the time, Niccolò di Pietro Gerini, Agnolo Gaddi, Bartolomeo di Bertozzo and Tommaso del Mazza.
In the rich residence, but at the same time a work place and business centre, he received kings, noblemen and famous people, among whom Pope Alexander V and King Louis of Anjou. The Palazzo is currently used for temporary exhibitions, on the first floor it hosts the State Archive, which includes the very precious Datini Archive with many accounting books, as well as the correspondence and the documents produced by the many Datini businesses, which form an irreplaceable testimony of the fourteen century commercial practices, of the operation of markets, of the trends of exchanges and prices. The archive also holds original samples of fourteenth century fabrics. The Datini International Institute of Economic History is also located in the building.