In October 1542, Marcantonio and Adriano Thiene initiated the grandiose restructuring of their 15th-century family residence in Vicenza, which was to subsequently occupy an entire block. Very wealthy and powerful, the sophisticated Thiene brothers felt they needed a setting that would suit their cosmopolitan social life and the nobility of their guests. At the same time, they wanted to draw attention to their social standing in the city with a princely palazzo that would offer a tangible sign of their aristocratic power.
The concept and initial plans for palazzo Thiene were probably produced by the mature and experienced Giulio Romano, while it appears that the younger Andrea Palladio was responsible for the executive drawings and the actual construction work. Palladio in any case assumed an essential role in the project following Giulio's death in 1546.
Work on the building began in 1542 but proceeded very slowly. The date 1556 is inscribed on the outer façade, and in the courtyard we find the date 1558. Only a small portion of the grandiose project was completed.

In 1560 Palladio designed the facade of Bernardo Schio's house in Vicenza, in the neighbourhood of the Ponte Pusterla. Since Palladio was occupied in these years with a series of Venetian projects which required his almost permanent presence in the capital, his supervision of the building works on the Palazzo Schio became so distracted that the master-mason charged with its execution interrupted works for want of any clear instructions. After Bernardo's death his widow showed no interest in concluding the works, which were only completed by Bernardo's brother Fabrizio, in 1574-1575, after the stones and other construction materials had long lain piled up in the villa's courtyard.

The impressive section of palace which forms the backdrop to Piazza del Castello is the compelling testimony to the unfortunate demise of a Palladian initiative. To the left of the fragment the old Quattrocento home of the Porto family is clearly visible, though it had been destined for gradual demolition as construction of the new palace advanced: given the results one cannot but appreciate the farsighted prudence of the patron, Alessandro Porto. The dating is uncertain, though undoubtedly after 1570.
The location of the Palazzo, as backdrop to the Piazza, made necessary an accentuated monumentality capable of dominating this great open space.
In all likelihood the Palazzo was intended to grow to seven bays in length and have a courtyard concluding in an exedra, as analysis of the surviving walls demonstrates. It is unclear what circumstances halted the construction, which Vincenzo Scamozzi declared he had personally carried to its present, partial, completion in 1615.

It is very probable that Iseppo (Giuseppe) Porto's decision to undertake construction of a great palace in the Contrada dei Porti was taken to emulate the edifice that his brothers-in-law Adriano and Marcantonio Thiene had begun to erect, in 1542, only a stone's throw away. It is also possible that it was Iseppo's very marriage to Livia Thiene, in the first half of the 1540s, which provided the concrete occasion for summoning Andrea Palladio.
The palace was inhabitable from December 1549, though less than half the façade was standing and would only be completed three years later, in 1552. Numerous autographed drawings by Palladio record the complex design process. They show that right from the beginning Palladio planned for two distinct, residential blocks, one to lie along the street and the other contiguous to the back wall of the courtyard. In the Quattro Libri the two blocks are interconnected by a majestic courtyard with enormous Composite columns: this is quite clearly a re-elaboration of the original idea in the interests of publication.