After the visit to Santiago by the Catholic Monarchs in 1486, they decided to build a royal hospice in the city of the apostle, to attend to the pilgrims who were travelling the Camino de Santiago at the time. The royal architect, Enrique Egas, was in charge of drawing up the layout and directing the construction of the hospital between 1501 and 1511. The works lasted 10 years and the popes offered indulgences to those who cooperated. The façade is slightly later and was renovated in the 17th century, centred on a Renaissance façade, contracted to the French masters Martín de Blas and Guillén Colás in December 1519.

It is an exceptional building, very different from the large rectangular hospitals that were customary in the Middle Ages. The two initial cloisters were modified in Renaissance style by Rodrigo Gil de Hontañón.

In 1678 Frei Tomás Alonso, as he did with the Baroque balconies that support the choir of San Martiño Pinario, reformed the Renaissance façade by introducing a large balcony supported on large corbels profusely decorated with characteristic and exuberant plant decoration, and three new windows.

The building was used as an inn until the mid-20th century. In 1953, the Instituto Nacional de Previsión, dependent on the Ministry of Labour, built a new building in Galeras Street, where the old Hospital moved that same year, abandoning the old building, which was transformed into the Hostal dos Reis Católicos, later called Hotel dos Reis Católicos, and currently the Parador Museo Santiago, part of the network of Parador Hotels.

The façade of the Hospital de los Reyes Católicos is in the Plateresque Gothic style, being, together with the Carlos V de Vivero gate, the only examples of this architectural style in Galicia. Two large coats of arms flank the doorway, with the arms of Castile and, on either side, the cross in a circle which is the emblem of the Hospital. The Royal Chapel, which serves as the hospital's church, has an important 16th-century entrance grille from Toledo workshops and has been protected as a monument since 1912.

Four courtyards surround it, two Renaissance and two Baroque, forming a Greek cross. The first two were originally designed by Enrique Egas and are known as the courtyard of San Juan and the courtyard of San Marcos. The two baroque ones are named after the other evangelists of the Catholic Church, St. Luke's courtyard and St. Matthew's courtyard.