Construction was started in 1494 by Diogo Lobo, 2nd Baron of Alvito, under the orders of King João II, and completed “in the time of King Manuel I”. In 1897, the 4th and last Marquis of Alvito, José Lobo da Silveira Quaresma sold the Castle to King Carlos I. King Manuel II mentions it in his last will and testament, integrating it into the estate which he provides to establish the Fundação da Casa de Bragança.
In 1993, it was opened to the public as a Pousada boutique hotel, managed by Enatur. The Alvito Professional School of Hotel Services currently uses the castle.