Malacañang Park was created when rice fields on the south bank of the Pasig River across from the official residence of the President of the Philippines were acquired on orders of President Manuel L. Quezon in 1936-1937. Intended as a recreational retreat, the main features of the planned complex for the park were three buildings: a recreation hall for official entertaining, a community assembly hall for conferences with local government officials, and a rest house directly opposite the Palace across the Pasig River which would serve as the venue for informal activities and social functions of the President and First Family.

Two buildings were built prior to World War II. The first was a presidential rest house with a swimming pool, and the other, a recreation hall for official entertaining. The buildings constructed by the Bureau of Public Works were the product of designs by Architect Juan Arellano and Antonio Toledo. The prewar park contained, in addition to the rest house and recreation hall, a putting green, stables, and shell tennis courts.

During the Japanese Occupation, President Jose P. Laurel had a community assembly hall built, and the putting green was expanded into a small golf after an assassination attempt on him took place  in Wack-Wack golf course. The existing gazebo in the golf course dates to the Laurel administration.

President Manuel Roxas further improved the golf course in Malacañang Park and maintained a truck garden as part of the food self-sufficiency program of his administration.

During the administration of President Ramon Magsaysay, an estero was filled in joining the properties of Malacañang Park and the Bureau of Animal Industry, as part of a GSIS housing project for presidential guards and other workers. The Park grounds were refurbished through the efforts of First Lady Evangeline Macapagal in the early 1960s. She renamed the rest house Bahay Pangarap (which means “house of dreams”).

During presidency of Ferdinand E. Marcos, Malacañang Park became increasingly identified with the Presidential Guards. It was during the Marcos administration that the Bureau of Animal Industry building became the headquarters of the Presidential Guards (today a component unit of the Presidential Security Group). Gen. Fabian Ver gained jurisdiction over some of the historic buildings, including the recreation hall, which became (and remains) the PSG gymnasium, and the community assembly hall which was turned into the presidential escorts building.

Under President Fidel V. Ramos, Bahay Pangarap was restored and became the club house of the Malacañang Golf Club (the old Club House had become the residence of President Marcos’ mother, Mrs. Josefa Edralin Marcos).  Restoration was supervised by Architect Francisco Mañosa at the initiative of First Lady Amelita M. Ramos and inaugurated as the New Bahay Pangarap on March 15, 1996 as an alternate venue for official functions in addition to recreational and social activities.

In 2008, the historic Bahay Pangarap was essentially demolished by Architect Conrad Onglao and rebuilt in contemporary style (retaining the basic shape of the roof as a nod to the previous historic structure), replacing, as well, the Commonwealth- era swimming pool and pergolas with a modern swimming pool. It was inaugurated on December 19, 2008 by President Gloria Macapagal-Arroyo at a Christmas reception for the Cabinet.  Administrative Order No. 251, issued on December 22, 2008, placed the administration of Bahay Pangarap under the Internal House Affairs Office of the Private Office of the President of the Philippines.

Malacañang Park has always been a recreational park, and is not a military facility. The facilities and area of the PSG are distinct from the demarcation of Malacañang Park.

In August, 2010, President Benigno S. Aquino III became the first President of the Philippines to make Bahay Pangarap his official residence, although previous presidents have stayed there.