The construction of the future Grand Bazaar's core started during the winter of 1455/56, shortly after the Ottoman conquest of Constantinople. Sultan Mehmet II had an edifice erected devoted to the trading of textiles. In its name, Cevâhir Bedestan (English: Gems Bedesten) the word "Bedesten" is an alteration of the Persian word bezestan (bedesten), derived from bez ("cloth"), and means "bazaar of the cloth sellers". The building - named alternately in Turkish "Iç" (English: Internal), "Atik" (English: Ancient), or "Eski" (English: Old) Bedesten - lies on the slope of the third hill of Istanbul, between the ancient Fora of Constantine and of Theodosius. It was also near the first Sultan's palace, the Old Palace, which was also in construction in those same years, and not far from the Artopoléia quarter, a location already occupied in Byzantine times by the bakers.
The construction of the Bedesten ended in the winter of 1460/61, and the building was endowed to the waqf of the Aya Sofya Mosque. Analysis of the brickwork shows that most of the structure originates from the second half of the 15th century, although a Byzantine relief representing a Comnenian eagle, still enclosed on the top of the East gate of the Bedesten has been used by several scholars as proof that the edifice was a Byzantine structure.
At the beginning of the seventeenth century the Grand Bazaar already had achieved its final shape. The enormous extent of the Ottoman Empire in three continents, and the total control of road communication between Asia and Europe, rendered the Bazaar and the surrounding Hans or caravanserais, the hub of the Mediterranean trade. According to several European travelers, at that time, and until the first half of the 19th century, the Market was unrivaled among the markets in Europe with regards to the abundance, variety and quality of the goods on sale. At that time we know from European travelers that the Grand Bazaar had a square plan, with two perpendicular main roads crossing in the middle and a third road running along the outer perimeter. In the Bazaar there were 67 roads (each bearing the name of the sellers of a particular good), several squares used for the daily prayers, 5 mosques, 7 fountains, 18 gates which were opened each day in the morning and closed in the evening (from these comes the modern name of the Market, "Closed Market" Around 1638 Turkish traveler Evliya Celebi gave us the most important historical description of the Bazaar and of its customs. The number of shops amounted to 3,000, plus 300 located in the surrounding Hans, large Caravanserais with two or three storeys round a porticoed inner courtyard, where goods could be stored and merchants could be lodged. In that period one tenth of the shops of the city were concentrated in the market and around it. For all that, at that time the market was not yet covered.
In nineteenth century, the growth of the textile industry in western Europe, the introduction of mass production methods, the Capitulations signed between the Empire and many European countries and the forestalling - always by European merchants - of the raw materials needed to produce goods in the Empire's closed Economy, were factors which all together provoked the decadence of the Market. By 1850, rents in Bedesten were ten times lower than two to three decades before. Moreover, the birth of a west-oriented bourgeoisie and the commercial success of the western products pushed the merchants belonging to the minorities (Greek, Armenian, Jewish) for moving out of Bazaar, perceived as antiquated, and for opening new shops in quarters frequented by Europeans, as Pera and Galata.
In 1914 the Sandal Bedesten, whose handlers of textile goods had been ruined by the European competition, was acquired by the city of Istanbul and, starting one year later, was used as an auction house, mainly for carpets. In 1927 the individual parts of the bazaar and the streets got official names.