The man-made pool on the site of the temple was completed by the fourth Sikh Guru, Guru Ram Das, in 1577. In 1581, Guru Arjan initiated the construction of the Gurdwara.

Guru Arjan planned a gurdwara at a level lower than the city to emphasize humility and the need to efface one's ego before entering the premises to meet the Guru. He also demanded that the gurdwara compound be open on all sides to emphasize that it was open to all. The sanctum inside the pool where his Guru seat was, had only one bridge to emphasize that the end goal was one.