Construction of Old Capitol began with the laying of the cornerstone on July 4,1840. Nine days later, the project's architect, John F. Rague, resigned, leaving Chauncey Swan, one of the territorial government commissioners who had selected the site of Iowa City and the capitol, to oversee construction.

Most of the four-ton blocks of Devonian limestone used in the original construction were quarried from bluffs along the Iowa River near North Liberty, floated on barges to Iowa City and then hauled by oxen to the construction site. Original floor joists, roof trusses and other supporting beams were hand hewn from native oak. An unusual reverse spiral staircase dominated the central hallways, and the building's dome was first sheathed in copper.

By 1842, four rooms in Old Capitol were completed. The Iowa Legislative Assembly used the building for the first time in December of that year. The building was not completed until after the state government, having just appropriated $4,000 to finish construction of Old Capitol, moved to Des Moines in 1857.