The courtyard was completed probably around 1465 during the reign of Sultan Mehmet II (the Conqueror), but received its final appearance around 1525-1529 during the reign of Sultan Süleyman I (the Magnificent) where it was expanded and renovated. This was the administrative centre of the Ottoman Empire and the square where ceremonies were held. It is surrounded by arcades on all four sides. The major axis of the courtyard which has various axes is the Gate of Felicity (Bâbü’s-Saâde) axis which represents the Sultan. On the right hand side of the courtyard we find the palace kitchens; on the left hand side are the Divan Lounge or Council Hall (Divanhane), the Outer Treasury, the Carriages’ Gate of the Harem, the Tower of Justice and the Tressed Halberdiers’ Ward. The Council Hall, i.e. the Imperial Council (Dîvan-i Hümâyûn), is also called Kubbealtı, which means "under the dome", in reference to the domed roof of the council main chamber. At a lower level in the rear of the courtyard arcades are located the Imperial Stables and the Beshir Agha (Beşir Ağa) Mosque. The Second Courtyard was also referred to as the Divan Square (Divan Meydanı) or the Justice Square for being the site of two important institutions, the Council Hall (Divanhane) and the Tower of Justice where state affairs were being discussed four times a week.
This courtyard was the venue where the Sultans’ accession to the throne ceremonies (Cülûs) took place(H. 1524, 25b-26a) as well as the ceremony for the handing over of the Sacred Banner (Sancak-ı Şerif) to the commanders of expeditionary forces going on a military campaign; the Eve Reception (Arife Divanı) - held the day before the Bayram-religious holiday -; the Bayram Greetings Reception (Bayramlaşma Töreni) (B. 200, 159b-160a); the ceremonies held on the occasion of the handing out of their trimonthly salaries (ulûfe) to the Cavalry Soldiers (Sipahi) and Janissaries; and the ceremonies organized for the reception of foreign ambassadors. The salary distribution ceremony, which took place every three months was a most glorious event called the Victory Gathering (Galebe Divanı). The reception of foreign dignitaries and ambassadors was normally arranged for the same day, so that they could watch while salaries and food were distributed in an ostentatiously opulent manner to the soldiers lined up along the courtyard arcades, thus creating an occasion to display the wealth and might of the Ottoman Empire. Ambassadors were then received by the Grand Vizier in the Council chambers, where a banquet was held in their honour.