The castle was built at the beginning of the 13th century at the behest of Margrave Dietrich von Meißen to protect himself against the neighboring burgraves of Dohna. Already in 1224 it burned down during a campaign, but was rebuilt in 1240-1256. At the end of the 14th century, the castle was fortified in such a way that it was considered one of the strongest in the country. The burgraves of Dohna, who were very powerful in the border region (but also acted as robber barons), lost all of their importance in the course of the Dohna feud (1385-1402), so that Tharandt Castle also lost its defensive function. It was fought over during the Hussite invasion of 1429 and, due to its strength, served as a storehouse for the elector's documents and valuables.
From 1476 Duchess Sidonie temporarily stayed at the castle. She was the daughter of the Bohemian King George of Podebrady and was married to the Saxon Duke Albrecht to seal the Treaty of Eger, which regulated the Saxon-Bohemian border that is still valid today. From 1500 she lived there permanently until her death in 1510. After that, the castle was no longer inhabited and was gradually dismantled. The neighboring mountain church was built on part of the castle complex and from castle materials in 1626-1629.
From the end of the 18th century, the castle ruins came back into consciousness in the course of the castle romanticism and were processed by many romantic painters and draftsmen.