The Taira clan fell in a battle with the Minamoto clan in the late Heian period. Yanagi no Gosho Shrine is believed to have been the temporary imperial palace of Emperor Antoku in the period when the Taira clan led life at sea during the battle.

When the Taira clan was driven away from the imperial capital by warlord Minamoto no Yoshinaka in 1183, and headed for Dazaifu in obedience to Emperor Antoku, the clan constructed a palace in this area called Yanagigaura, indicating evidence of powerful local clans' malicious attempts. It is said that this is why this entire area was named Dairi, a homonym meaning "imperial palace."

In the precincts of this shrine is a monument to waka poems composed by members of the Taira clan in remembrance to their past prosperous lives in the imperial capital.