The mosque itself was originally the house of Muhammad upon his emigration to Madinah. He later used the grounds of his house to build a mosque, a project upon which he worked himself. This original mosque was an open-air mosque. From this original mosque, the basic plan of a mosque was outlined.
The original mosque was not that large, and today is only a small portion of the larger mosque. However, there are many Islamic traditions which encourage worship in the older part, especially a certain area known as Riyaad ul Jannah or the Garden of Heaven. Later Islamic rulers expanded the mosque, including the famous green dome which stands over the site of Muhammad's body.
The mosque was greatly expanded after the formation of Saudi Arabia. The latest renovations took place under King Fahd and have greatly increased the size of the mosque allowing it to hold a large number of worshippers and pilgrims. It is also completely air-conditioned and decorated with marble.
The newer portion is easily discernable from the older one from the inside, with the older portion having more colorful and varied decorations as well as many small pillars.
The mosque is located in what was traditionally the center of Madinah, with many hotels and old markets nearby. It is a major pilgrimage site and many people who perform the hajj later go on to Madinah to visit the mosque.