A Japanese and Mongolian research team found the complex on a grassy steppe 150 miles east of the Mongolian capital of Ulan Bator, said Shinpei Kato, professor emeritus at Tokyo's Kokugakuin University.
Genghis Khan (c. 1162-1227) united warring tribes to become leader of the Mongols in 1206. After his death, his descendants expanded his empire until it stretched from China to Hungary.
Genghis Khan built the palace in the simple shape of a square tent attached to wooden columns on the site at around 1200, Kato said.
The researchers found porcelain buried among the ruins dated to the warrior's era, helping identify the grounds, Kato said. A description of the scenery around the palace by a messenger from China's Southern Tang Dynasty in 1232 also matched the area, he added.
Genghis Khan's tomb is believed to be nearby because ancient texts say court officials commuted daily from the mausoleum later built on the grounds to the burial site to conduct rituals for the dead.
Kato said his group was not aiming specifically to find the grave. Still, he said finding it would help uncover the secrets of Genghis Khan's power.
"Genghis Khan conquered Eurasia and built a massive empire. There had to have been a great deal of interaction between east and west at the time, in terms of culture and the exchange of goods," Kato said in an interview. "If we find what items were buried with him, we could write a new page for world history."
Genghis Khan's grave site is one of archaeology's enduring mysteries. According to legend, in order to keep it secret, his huge burial party killed anyone who saw them en route to it; then servants and soldiers who attended the funeral were massacred.
Kato said an ancient Chinese text says a baby camel was buried at the grave in front of her mother so the parent could lead Khan's family to the tomb when needed.
Archaeologists have been forced to abandon their searches for Khan's grave in the past, however, due to protests that excavation would disturb the site.
An American-financed expedition to find the tomb stopped work in 2002 after being accused by a prominent Mongolian politician of desecrating traditional rulers' graves.
In 1993, Japanese archaeologists terminated a search for the tomb after a poll in Ulan Bator found the project unpopular.
According to Mongolian tradition, violating ancestral tombs destroys the soul that serves as protector.
If researchers do find the tomb, they would also likely discover the grave of Kublai Khan — Genghis' grandson who spread the Mongol empire to southeast Asia and became the first emperor of China's Yuan Dynasty.
According to ancient texts, 13 or 14 Khan warriors, including Genghis and Kublai, are buried in the same place.
Kato said if the team discovered the tombs, he would step aside and leave the matter of how to proceed up to his Mongolian colleagues.
"We will consult our Mongolian colleagues and decide what the best next step would be — we may have to escape back to Japan," Kato said, laughing. "Excavation should be done by Mongolians — not by those of us from other countries. It is up (to) Mongolians to decide."