Palazzo Capua in Sliema is to be integrated with the Victoria Hotel next door.
The palace's guest rooms are currently being upgraded with soft furnishings as part of the hotel's extension and refurbishment project.
The palace will also cater for small private functions such as dinner and cocktail parties and large functions such as weddings, the hotel said.
Palazzo Capua is an 18th century palace and one of the remaining few historical sites in Sliema. It was originally the residence of Prince Charles of Capua who was exiled from Naples by his brother King Ferdinand II of the two Sicilies.
Acting general manager Claire Xuereb said the integration of Palazzo Capua with the hotel's facilities would provide better and more sophisticated entertainment venues at The Victoria Hotel.