Philip I of Falkenstein had a new castle built a few meters east of the old Nuremberg tower castle – initially called "Neu Falkenstein" after the family's ancestral seat in the Palatinate. The castle, whose widely visible castle tower dates back to the 15th century, was first mentioned in a document in 1364. Before 1418, the castle came into the possession of the Lords of Nassau-Weilburg, who granted it as a fief along with the old County of Nuremberg. Subsequently, several noble families owned shares in Falkenstein Castle, including the Lords of Kronberg, Staffel, and Hattstein. The latter were known as robber barons who used the castle's location as an ideal base for raids. From 1679, the Barons of Bettendorf were the feudal lords of the castle and village of Falkenstein for three generations, which continued to bear the name of Nuremberg.
The frequent changes of ownership, however, damaged the complex. In 1784, the castle's old residential building had to be demolished. Falkenstein Castle increasingly served as a shelter for the homeless, and after 1800, it served as a quarry for the Falkenstein community. In the mid-19th century, the Frankfurt merchant Osterrieth obtained a demolition ban.
In 1954, the municipality of Falkenstein acquired the castle ruins.