As the name Kensington Palace Gardens indicates, the history of the roadway is linked to the history of Kensington Palace itself. Kensington Palace was originally a Jacobean House and was purchased by William III in 1689 from the Earl of Nottingham. The house was reconstructed by Christopher Wren and Hawksmoor. The gardens were landscaped and the Royal Kitchen Gardens formed. These included a forcing ground for the growing of fruit such as melons.

However, in 1840 it was decided that the Kitchen Gardens should be resited at Windsor and the ground of the original gardens let on building leases. By an Act of 1841 the grounds were formally put into the hands of the Commissioners of Woods, Forests and Land Revenues (the forerunners of The Crown Estate). They included the Kitchen Gardens and land previously laid out as "wilderness" by Queen Anne around 1705. The site of 1-10 Palace Green was taken out of some open ground called Palace Green.

Surveyors Thomas Chawner and (Sir) James Pennethorne produced a projected layout for the building land. It consisted of a broad straight avenue, 70 feet wide which was named The Queen's Road (now Kensington Palace Gardens). It was necessary to purchase three properties at the northern end of the planned road in order to create access of Bayswater Road. The rest of the land was divided into 33 building plots. The intention was to create two rows of detached, and some semi-detached houses, each with their own plot of land of about an acre in size. The plots would be let on 99 year leases to lessees who would be expected to spend not less than £3,000 on their houses. Plans and specifications were speedily approved. They included the layout of an ornamental garden, boundary walls to the plot and carriage entrances with iron gates. It was at this time that principle of a service charge for the upkeep if the roadway was established.

The first tender to be accepted was submitted by Samuel West Strickland for three plots, on which 1-5 KPG were erected (only Nos 4 and 5 now survive). Another tender was not submitted until 1843 by Blashfield, known as a manufacturer of inlaid and tessellated pavements. He wished to develop 21 houses. Although the orginal intention had been to let the plots to individuals it was agreed to let the 21 plots to Blashfield.