The Este palace stands just a short walk from the town centre, overlooking Piazzale Della Rosa; it was built to the design of G. Rainaldi, with contributions from B. Avanzini and G. Vigarani, who took over the project in 1634. More than three centuries have battered and corroded it, but with the adjoining Peschiera or Fontanazzo, it is still an impressive building that testifies to the Este family's wish to demonstrate that its power was undiminished after the loss of Ferrara.

Today the palazzo is a secondary headquarters for the Modena Military Academy, and its interior with frescos by Boulanger and other decorations by Colonna and Mitelli can only be viewed with permission. However, the exterior, restored in the early '90s, is of considerable interest. Newly painted in ivory white, against which architectural features stand out in brownish shades, the facade now has an austerely elegant air, very different from the harsh tones of its previous ochre. The square in front shows signs of careful architectural planning, since the facade of the church of San Francesco, on the right, is mirrored exactly on the other side, with an effect like the two wings of a stage set. Where no marble was available for the outside of the church, painters have made up the deficit by creating fake sculpted decorations; inside, the painted ceiling gives the illusion of unlimited perspective. The Este intention was to make the Fontanazzo into a complex fountain with a large number of jets and sprays leaping from imitation rocks.