The Gracanica monastery, near Lipljan in Kosovo, is one of the last monumental foundations of King Milutin Nemanjic.

Built on the ruins of the former Church of the Holy Virgin, the monastery, finished in 1321, was dedicated to the Dormition of the Holy Virgin. On the southern wall of the chapel is written the king's charter, including the following words: "I have seen the ruins and the decay of the Holy Virgin's temple of Gracanica, the bishopric of Lipljan, so I have built it from the ground and painted and decorated it both within and without".

Of the former monastic compound, only the church has survived. The narthex and the tower were added a few decades later, in order to protect the frescoes on the west facade. The narthex was heavily damaged by the Turks several times between 1379-1383 when the tower was burned and the fire devoured a rich collection of manuscripts and other precious objects. The narthex was reconstructed in 1383. Again, Gracanica suffered damages at the time of the Kosovo battle (1389).

During Turkish rule, Gracanica became an important cultural center. In the time of Metropolitan Nikanor (1528-1555) several icons were painted on the altarpiece. Also, because of the printing press, Nikanor obtained numerous service books and objects for the monastic use. The royal doors were commissioned in 1564 by Metropolitan Dionisije, whose death is represented on a fresco in the narthex. A major restoration took place through the efforts of Patriarch Makarije Sokolovic. All the openings on the external narthex were walled up and new frescoes were completed in 1570. Thanks to Patriarch Pajsije, the church got its leaden roofing, and in 1620 the large cross with the Crucifixion was made on the iconostasis. The monastery was exposed to new damages toward the end of the seventeenth century, in the war between Austria and Venice against the Turks, after the second siege of Vienna - in which the Serbs took part on the Christian side. They rebelled against the sultan Jeghen Pasha terrorizing Serbia, who removed the leaden cross and pulled out the floor tiles, together with the treasure hidden in the church by Patriarch Arsenije III.

Gracanica represents the culmination of the Serbian medieval art of building in the Byzantine tradition. The church has the form of a double inscribed cross, one inside the other, the inner one providing for a vertical silhouette so as to raise the central dome upwards on a graded elaboration of masses. The dome rests on four free-standing pillars. Above the spaces between the cross-shafts, four smaller domes give a regular structure to the whole crowning complex. Three three-sided apses (the central one being the largest) put a mild distinction on the altar space externally. The diaconicon and the prosthesis are separated by full walls. Between the nave and the narthex, there are wide, heavy pillars and the catholicon is on a level higher. The church was built in alternate courses of brick and stone. At the end of the fourteenth century, an exonarthex was added with double arcades, but these were blinded in the sixteenth century.

In the church, three kinds of painting can be discerned. The earliest is found in the nave, whereas two later ones can be recognized in the narthex. The frescoes were painted in 1321-22. The painting works have been well-preserved. The compositions in the nave deal with the earthly life of Jesus and the ecclesiastical calendar.

The focal paintings of Gracanica include the Festival Cycle, the Passion and the miracles of Christ. Inside the narthex, there are portraits of the founders: King Milutin and Queen Symonida, Queen Helen d'Anjou (king's mother) as a nun and King Milutin as a monk. Of particular importance is the Nemanjich dynasty genealogy, the first-ever painted, which starts with Stefan Nemanja and ends with Milutin. Also in the narthex, there is an exhaustive illustration of the Last Judgment. The scenes from the life of St. Nicholas are in the north parecclesion, while the walls of the south one display scenes from the Old Testament and the lives of Christ and the Mother of God. The master painters supposedly were Michael and Eutihije with their assistants.

There are also considerable frescoes from 1570 in the exonarthex, commissioned by Patriarch Makarije Sokolovic. There are some paintings in the narthex that date back to the late fourteenth and early fifteenth centuries, including the Baptism of Jesus, parts of the Virgin's Akathistos Hymns and the Ecumenical Councils. Two subjects, however, dominate the narthex of Gracanica: the Doxology to the Holy Virgin and the procession of the Serbian archbishops from Saint Sava to Patriarch Makarije Sokolovic. A historical composition of the death of the Metropolitan of Gracanica Dionisije covers the southeastern part of the narthex.

The paintings of Gracanica rank highest among the achievements of Milutin's period, characterized by influences of the Byzantine splendiferous and luxurious style called the Paleologan Renaissance. In terms of style, they are also related to the art of the other of Milutin's foundations.