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In 1928 Hale secured a grant of US$ 6 million from the Rockefeller Foundation for "the construction of an observatory, including a 200-inch reflecting telescope" to be administered by the California Institute Of Technology (Caltech), of which Hale was a founding member. In the early 1930s, Hale selected a site at 5600 feet on Palomar Mountain in San Diego County, California , USA as the best site, and less likely to be affected by the growing light pollution problem in urban centers like Los Angeles . Corning Glass Works were assigned the task of making a 200-inch mirror out of a new glass blend called Pyrex . Construction of the observatory facilities and dome started in 1936, but because of interruptions caused by World War II , the telescope was not completed until 1948.

The Hale 200-inch remained the largest operating telescope in the world until BTA-6 got operational in early 1980es.
It continues to be used every clear night for scientific research by astronomers from Caltech and their operating partners, Cornell University and the Jet Propulsion Laboratory . It is equipped with modern optical and infrared array imagers, spectrographs, and an Adaptive Optics system.