At the order of Catherine II, a new building was erected along the Neva embankment in alignment with the North Pavilion of the Small Hermitage. Work went on from 1771 till 1787 and produced a larger structure than the Small Hermitage which eventually was named the Great Hermitage. Designed by the architect Yury Velten, it as an example of Classical architecture of the late 18th century. Its interior decorations were described in detail at the end of the 18th century by a well-known Petersburg physician and natural scientist Johann Georgi: "The rooms overlooking the Neva are decorated with very refined taste: the floors are inlaid, the ceilings have painted inserts. There are big rounded plate-glass windows, crystal chandeliers, silk curtains with tassels, richly embellished fire-places or ceramic stoves, doors with mirrors, corner tables, clocks, sofas and the like furnishings filling the rooms". The Oval Room housed a library.
The new palace became the centre of high society life. All the principal personalities of the court, foreign ambassadors and the Petersburg nobility were invited to the "large Hermitage assemblies". A tradition established by Catherine II required that she first dance a minuet and that Grand Duke Pavel Petrovich dance a Polish dance with one of the oldest ladies of the court. In the gallery overlooking the courtyard, Catherine had her private living quarters where she used to entertain herself with her favourite hobbies: she carved seals, studied chemistry making alloys for cameos, and played billiards with her guests. The Great Hermitage apartments also accommodated art collections.