Ten years after the construction of National Government Building I, Austro-Hungarian authorities had National Government Building II built in 1896, on the eastern side of the first palace. The enlargement was meant to accommodate the increase in the volume of work and the number of civil servants employed by the central government.

The building was meant to reflect the spirit of the Renaissance palaces of Florence and was designed by Karl Panek, who was tasked with making it look similar to the first governmental palace.

Initially, the building was home to the national printing press, the national supply office and the engineering directorate. A third story was added in 1930.

During the period of the SFR of Yugoslavia it housed the State Railway Directorate and was renamed the State Railway Directorate Building.

The building was damaged during the Siege of Sarajevo (1992-1995), and, in 1994, the Ministry of Foreign Affairs of BiH was set up in one part of the building, while the rest of the structure remained home to the Railway Directorate of the Federation of BiH.

This historical building – National Government Building II (the FBiH Railway Directorate Building) – was made a National Monument of BiH in 2008.