The house was first built for homesteader Anthony Chaffin.[3] After the home and surrounding ranchland was purchased by copper magnate Marcus Daly in 1886, it was redesigned in the Queen Anne architectural style, with a tower.[3] Daly's widow, Margaret, hired architect A. J. Gibson to redesign it in the Colonial Revival and Georgian Revival styles in 1910.[4]
Margaret Daly died in 1941, and the house was ultimately inherited by her granddaughter, Countess Margit Sigray Bessenyey of Hungary, in the 1950s.[3] When she died, it was inherited by her stepson, Francis Bakach-Bessenyey, who deeded it to the state of Montana in 1986 in exchange for forgiveness of $400,000 in inheritance taxes.[3] The Daly Mansion Preservation Trust was established that same year, in part with a donation from him.[3]
In 1986, the Trust began renovations on the mansion, which had been abandoned and closed since 1941. By 1987 a few rooms had been restored and the building opened to the public. A more extensive renovation was started in 2005.[2]
The house has been listed on the National Register of Historic Places since July 16, 1987.[1] It is now a house museum.[3]