The famous Sala di Psyche was decorated between 1526 and 1528. This large room was intended for entertaining, and a famous banquet was held here in 1530 in honour of Emperor Charles V during his first visit to Mantua. It was on that occasion that Marquis Federico Gonzaga was elevated to the rank of duke. The frescoes in this room illustrate Apuleius's The Golden Ass, a late-antique story that recounts Psyche's romantic adventures and the trials she endured in order to be allowed to marry Cupid. The decoration is spread across the ceiling, the lunettes, and the upper parts of the walls, and the individual scenes illuminated by a soft, nocturnal light, are represented with extreme foreshortening.

Above the socle area the west and north walls, each of which is broken up by windows, open onto frameless scenes of painted grottoes and a garden nymphaeum that are filled with characters from myth. Next these scenes, there are depictions of happy couples inserted above the windows. The painted frames of these scenes correspond in each case to the bas-relief window frame.

On the east and south wall, which have doors leading to the adjacent rooms of the palace, there is a continuous panoramic landscape. The fertile natural idyll of the landscape paintings has satyrs and nymphs preparing a feast for the gods. The table is decorated; the silver dishes are in place; several gods have already arrived; and others are seen in the distance. The focus of the celebration is on the wedding couple, Cupid and Psyche, who are being served on a sumptuous couch.

In the lunettes and fields on the ceiling we see, through a grillwork frame, a number of Cupid and Psyche's adventures, so that their banquet is vaulted by its own prehistory. In the vault Giulio tells the beginning of the story, while the stories of Psyche's suffering are painted in the lunettes.