Zhabdrung Ngawang Namgyel, the founder of Bhutanese state, built Punakha Dzong in 1637. It was originally named Puntang Dechen Phodrang Dzong, which means the Palace of Great Bliss.

Punakha Dong was built on the 8th day and 8th month of the Fire ox year in 1673. The Tibetan attacked the dzong in 1639 and 1644. The defenders successfully repelled the attacks. To commemorate the victory, a New Year festival was introduced and Yu Gyal Gonkhang Chen Mo, “the great shrine of the protective and victorious lord” was built.

The first King of modern Bhutan was crowned in Punakha Dzong. Punakha Dzong remained the centre of government until it was relocated to Thimphu. In 2011, the wedding of the 5th King was held in this fortress.