In 1992 His Majesty Sultan Qaboos directed that his country of Oman should have a Grand Mosque. A competition for its design took place in 1993 and after a site was chosen at Bausher construction commenced in 1995. Building work took six years and four months.

The Mosque is built from 300,000 tonnes of Indian sandstone. The main musalla (prayer hall) is square (external dimensions 74.4 x 74.4 metres) with a central dome rising to a height of fifty metres above the floor. The dome and the main minaret (90 metres) and four flanking minarets (45.5 metres) are the mosque’s chief visual features. The main musalla can hold over 6,500 worshippers, while the women’s musalla can accommodate 750 worshippers. The outer paved ground can hold 8,000 worshippers and there is additional space available in the interior courtyard and the passageways, making a total capacity of up to 20,000 worshippers.

A major feature of the design of the interior is the prayer carpet which covers the floor of the prayer hall. It contains, 1,700 million knots, weighs 21 tonnes and took four years to produce, and brings together the classical Tabriz, Kashan and Isfahan design traditions. 28 colours in varying shades were used, the majority obtained from traditional vegetable dyes. It is the largest single piece carpet in the world. The world's largest hand-woven carpet was produced by Iran Carpet Company (ICC) at the order of the Diwan of the Royal Court of Sultanate of Oman to cover the entire floor of the main praying hall of the Sultan Qaboos Grand Mosque (SQGM) in Muscat. The carpet measures over 70 × 60 meters, and covers the 4343 square meter area of the praying hall, all in a single piece.

The Mosque is built on a site occupying 416,000 square metres and the complex extends to cover an area of 40,000 square metres. The newly built Grand Mosque was inaugurated by His Majesty the Sultan of Oman on May 4, 2001.

The whole interior of the Grand Mosque is panelled with off-white and dark grey marble panelling clothed in cut tile work. Ceramic floral patterns adorn arch framed mural panels set in the marble forming blind niches in a variety of classical Persian, predominantly Safavid, designs. The ceilings are inspired by those of Omani forts. The mihrab in the main prayer hall is framed by a border of Quranic verses and a gilded ceramic surround. The dome comprises a series of ornate, engraved stained glass triangles within a framework of marble columns, and a Swarovski crystal chandelier with gold-plated metalwork hangs down for a length of 14 meters.

The Grand Mosque inspired the founding of a contemporary institute dedicated to advanced Islamic studies with appropriate educational facilities and accommodation. The Institute is situated to the south of the Mosque complex site.