Hohenstein Castle was first mentioned in 1306 as "Castum Hohenstein in dem Grabfelde." Over the next 150 years, the hilltop castle changed hands several times until Duke William of Saxony, who granted the castle "zu dem Hohen Steyn" as a fief to the brothers Hans and Thomas von Lichtenstein. In 1525, rebellious peasants from Thomas Münzer's hordes invaded and burned the medieval castle to the ground.
The uninhabitable remains of the castle, still in fiefdom of the von Lichtenstein family, were not rebuilt as a Renaissance-style castle until 1573 by Michael von Lichtenstein. Shortly before the end of the Thirty Years' War, the castle was plundered by "Swedish peoples" in 1648. After changing owners several times, the castle came into the possession of the Barons von Imhof in 1759. In 1937, the family sold the castle, but not the surrounding lands.
The Reichspost used the castle as a postal convalescent home from 1941 onwards. After the Second World War, the German Federal Postal Service leased it to Caritas as a retirement home. In 1976, the Munich entrepreneur Oskar Hacker acquired the property. Since 2016, the castle has belonged to the non-profit Oskar Hacker Foundation, which leases it as a castle hotel with upscale dining.