The band was originally formed in 1980, featuring Timo Blunck, Holger Hiller, Thomas Fehlmann, and percussionist F.M. Einheit. The group's name stands for Das Palais Schaumburg in Bonn, the former residence of German chancellor.
Einheit left the group, eventually to join Einstürzende Neubauten and was replaced by Ralf Hertwig prior to Palais Schaumburg's first full length album Palais Schaumburg which was produced by David Cunningham and released in 1981. Shortly after it was released, Hiller left the band and started his solo career. He was replaced with Moritz von Oswald and vocalist Walther Thielsch.
The group made several singles and albums throughout early 80's, where their avant garde sounds were heavily influenced by funk, especially in albums Lupa and Parlez-Vous Schaumburg.