A fish palace was not a residence but a processing facility, a place where catches, most commonly pilchards or herring, were salted, pressed, and packed for export. The name has its origins in the Italian word "palazzio", borrowed into the language of the Atlantic fish trade and applied, with a certain unselfconscious irony, to industrial stone buildings on remote harbour edges.

The site at Kilmakilloge almost certainly corresponds to one of the "fish houses" marked on a map of Kilmakilloge Harbour published by Charles Smith in 1756, a cartographic record that places the building firmly within the commercial fishing activity of the mid-eighteenth century. That the structure endured well beyond its working life is suggested by a note from the Marquis of Lansdowne, who wrote in 1937 that a palace was still standing, though no longer in use, at Bunaw nearby. The ruined walls apparently remained visible at the roadside until relatively recently, a slow disappearance that ended when the site was cleared and built over. There are now no visible remains.