It was built by Shah Jahan in about 1633 A.D. It is located in the northern portion of the Paen Bagh. This separate court was meant to act as an abode in isolation for the emperor besides Harem and Royal court. The plinth and door frames of the pavilion are made of marble and its roof is curvilinear type. This residence of emperor was completely in itself a whole unit as it was linked with a number of the basement chambers (Tah-Khanas), cold chambers (Sard-khanas), and a Mosque. In sikh regime this Khilwat Khana was named as Khilat Khana where robes of honour were bestowed on the distinguished men by the Maharaja himself.
Recently, through the joint efforts of Agha Khan Cultural Services Pakistan (AKCSP) and Walled City of Lahore Authority (WCLA), conservational works were initiated had this site. After thorough research and exploration, this 625-square-meter “second fort” comprising 35 interlinked rooms, narrow staircases, and labyrinthine corridors was discovered and completely restored. The restoration was completed and its inaugural ceremony was held in September, 2025