The Rajabai tower was designed by Sir George Gilbert Scott, an English architect. It was modelled on Big Ben, the clock tower of the UK houses of Parliament in London.

The foundation stone was laid on March 1, 1869 and construction was completed in November 1878. The total cost of construction came to Rs. 2 lakhs (Rs. 200,000), a princely sum in those days. This entire cost was defrayed by Premchand Roychand, a prosperous broker who founded the Bombay Stock Exchange on the condition that the tower be named after his mother Rajabai.Premchand Roychand's mother was blind and as a staunch follower of Jain religion she was supposed to consume her dinner before evening. The evening bell of the tower helped her to know the time without anyone's help.