Krushna Chandra Gajapati Narayan Deo, Maharaja of Paralakhemundi was the direct descendant of the historic dynasty of the Gajapati kings ruled Orissa for more than seven centuries. During the regime of these kings, the boundaries of Orissa extended from the Ganga in the North to Udoyagiri in Nellore district in the South. Kolahomee, one of the sons of Kapilendra Deo, the Gajapati king of Orissa in the later half of the 15th Century came to this part of Paralakhemundi (then in Ganjam district) and founded the Raj family of Paralakhemundi.

Paralakhemundi is an ancient Zamindari lying in the western corner of the Southern portion of the Ganjam district, and it is bounded in the West by the district of Vizagpatnam and on the North by the Jaipur state and the Eastern ghats which are called Maliyas or tribal agencies. The town of Paralakhemundi is: “a straggling town in plan much like the letter ‘L’ scattered around the foot of the well wooded hill which is the distinctive feature of the place. The horizontal portion of the ‘L’ faces South, and at the corner where the ‘L’ and the vertical portion join, is situated the palace, a most picturesque group of building”. This group of buildings was designed and built by Mr. Chisholm.

Gajapati district has been named after Maharaja Sri Krushna Chandra Gajapati Narayan Deb, the Ex-Raja Sahib of Paralakhemundi estate (the 1st Prime Minister of Orissa State), who is remembered for his contribution in formation of a separate Orissa province and inclusion of Paralakhemundi estate in Orissa. Gajapati district came into being with effect from 2nd October 1992. Prior to this it was a part (Sub-Division) of Ganjam district.