According to historical records, the building was built in 1572 under the auspices of Muzaffer Pasha, the first Ottoman governor of Cyprus, and was modelled after Koza Han in Bursa. The building was reportedly built upon the remains of an older one. However, archaeologist Tuncer Bağışkan attributes the construction of the inn to his successor, Sinan Pasha, as Muzaffer Pasha had been appointed as the governor of Tripolitania on 26 August 1571. There is one surviving letter from Selim II about the inn, where, upon being informed that some shops had been demolished to build a caravansarai, he ordered that if the caravansarai was not profitable for the vakıf, it should be demolished and replaced with new shops.[1] Journalist Ahmet Tolgay, however, has written that Muzaffer Pasha ordered the construction and oversaw the groundbreaking of the building before being executed.[2] According to İslâm Ansiklopedisi, Muzaffer Pasha requested an architect for the reconstruction of Cypriot fortresses from Constantinople. The architect that was sent, named Bostan, could have constructed Büyük Han.[3]

Initially, the caravansarai was known as "Yeni Han", "the New Inn". It also became known as "Alanyalılar Hanı", "the Inn of those from Alanya", as it was frequented by merchants from Alanya. However, when the smaller Kumarcilar Han was built opposite the Asmaaltı Square, it became known as "the Great Inn" (Büyük Han) in the 17th century.[1]

Upon the British takeover in 1878, the inn was restored for use as a prison. It was used as the Central Prison of Nicosia between 1892 and 1903, when the prison was moved to a new building west of the Pedieos. In the years 1900 and 1901, when the British administration left the building, the shops at the back were extended up to the point where they met the road, with the permission of the Evkaf Administration. Between 1903 and 1947, the building was used as an inn. Between 1947 and 1962, it became a refuge for poor families where they could rent rooms cheaply.[4]