The building was operating as a poorhouse, as well as a school for Muslim clergy and place of public worship.It was built by Ishak Pasha, Grand Vizier under the rule of Mehmet II, and administrator of Thessaloniki under the rule of Bayezid II. It has the structure of reverse-T plan with a central area, two spherical domes, and lateral compartments on the western side and a pillared arcade. Beautiful geometrical and flora frescoes are still preserved on the central rectangular point of public worship, covered by two equal sized semi-spherical domes. The minaret, used to be decorated with multicolor (alaca) stones, but nothing but its base is preserved until today. At present Alaca Imaret hosts cultural activities and periodical exhibitions.