The existence of a Chapel Royal dates back many centuries.

In the earliest times, the Chapel Royal was not a building but an establishment: a body of priests and singers to serve the spiritual needs of the Sovereign.

During Tudor times the Chapel would follow the Sovereign around the country to whichever Palace or great house was in favour at the time. In Stuart times it came to rest at St James's and Whitehall Palaces, with a brief break during the Civil War when the Queen's Chapel was used as a stable by Cromwell.

Since Whitehall Palace burned down in the late 17th century the Chapel Royal has been based exclusively at St James's Palace. There are two Chapels Royal in the Palace complex: the Chapel Royal itself and the Queen's Chapel.

The Chapel Royal at St. James's Palace was constructed by Henry VIII and decorated by Hans Holbein in honour of the king's short-lived fourth marriage to Anne of Cleves.

Mary I's heart is buried beneath the choir-stalls. It was also here that Elizabeth I said her prayers for the defence of the realm against the threat of the Spanish Armada in 1588, having chosen to remain at St James's Palace to receive messages of its progress by fire beacons from Cornwall.

At the end of the Civil War, Charles I received the Sacrament of Holy Communion in the Chapel Royal at St. James's Palace before his execution in Whitehall in 1649.
 
Queen Victoria was married in the Chapel, and her marriage certificate, hand-written by the Archbishop of Canterbury and signed by both bride and groom, hangs on the wall in the vestry.

A number of alterations to the building were carried out in 1836 with the addition of the side galleries and a new ceiling with William IV and Adelaide to match the 1540 ciphers. The panelling dates from this time, and the pews were installed in 1876.

In 1997, the coffin of Diana, Princess of Wales lay before the altar where her family and friends could pay their respects in private, before the Princess's funeral in Westminster Abbey.

The Chapel Royal at St. James's Palace has a long musical history, and is considered to be the cradle of English church music. Among its many noted organists and composers were Thomas Tallis, William Byrd, Orlando Gibbons and Henry Purcell. Purcell lived in a suite of apartments in St James's Palace. The poet Dryden, who was frequently in debt, used to take refuge with Purcell in his apartments in order to avoid the clutches of persistent creditors.

One of the Chapel's most notable organists and composers was George Frederick Handel, who was appointed by George II on 25 February 1723 as 'Composer of Musick of His Majesty's Chappel Royal'. The title was constructed to allow Handel, still a German citizen, to contribute to the musical development of the Chapel Royal without actually being a member of it.

Handel composed the great anthem 'Zadok the Priest' for the coronation of George II in 1727 and it has been used at every coronation since. It is also sung each year at the Royal Maundy service in which the Queen distributes Maundy money.

The Queen's Chapel, across the road from the Chapel Royal, was built by James I for the Catholic bride of his son, later Charles I, and designed by Inigo Jones. Grinling Gibbons and Christopher Wren also had a hand in the decoration. The Chapel was used by the Catholic Queen Henrietta Maria until the outbreak of the Civil War, and in later centuries was the home of the Danish Church in London.