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Orissa became a new province on 1st April, 1936, fulfilling the persistent demands of Oriya speaking people to have a state of their own, with the silver city of Cuttack as its capital. But it was only in 1948, the province became a full fledged State with 13 districts, after the merger of  the princely states  . The capital was shifted in 1959 from Cuttack to Bhubaneswar, which was declared as the new capital of Orissa. And it was then, a new Raj Bhavan was constructed on a hillock, known as 'Bhalu Mundia' located on the western part of  the new township.

A sprawling space of 50(fifty) acres was ear marked for the residence of the Governor. The foundation stone for the Raj Bhavan was laid by Dr. Harekrushna Mahatab. The construction was completed on 31.03.1960. The entire complex is situated in an area of 5(five) acres which includes the main building, the administrative block, the annexe, the office of the reserve inspector, the reception counter, the garage and the godown.