Zhabdrung Ngawang Namgyal was known as one of the most prominent builders in Bhutan. He is believed to have constructed many dzongs in Bhutan, including the Simtokha Dzong. It is also known as Sangak Zabdhon Phodrang (Palace of the Profound Meaning of Secret Mantras), and is strategically located at a place with a common boundary to three western regions in Bhutan: Sha (Wangdi Phodrang), Wang (Thimphu), and Pa (Paro).
The area was believed to be inhabited by demons at that time who harmed the travelers during the night. Therefore, Zhabdrung defeated the demoness residing at this place and trapped in within a rock on the hill, over which the Dzong was constructed in 1629. The name Simtokha itself is derived from this particular incident: sunmo (demoness), do (stone), kha (on).
The Dzong has served for many administrative activities since. On 17 August 2019, Bhutanese Prime Minister Lotay Tshering and Indian Prime Minister Narendra Modi held a ceremony of exchanging of the official documents in the Dzong.