The Taj Hotel Bombay (Mumbai) photo on 1903

The hotel's original building was commissioned by Tata and first opened its doors to guests on 16 December 1903. It is widely believed that Jamsetji Tata decided to build the hotel after he was refused entry to one of the city's grand hotels of the time, Watson's Hotel, as it was restricted to "whites only". However, this story has been challenged by some commentators that suggest that Tata was unlikely to have been concerned with 'revenge' against his British adversaries. Instead, they suggest that the Taj was built at the urging of editor of The Times of India who felt a hotel "worthy of Bombay" was needed.

The original Indian architects were Sitaram Khanderao Vaidya and D. N. Mirza, and the project was completed by an English engineer, W. A. Chambers. The builder was Khansaheb Sorabji Ruttonji Contractor who also designed and built its famous central floating staircase. The cost of construction was £250,000 (£127 million in 2008 prices).

During World War I the hotel was converted into a hospital with 600 beds.

The Taj Mahal Tower, an additional wing of the hotel, was opened in 1973. It was designed by Melton Bekker.