Erected between 1350 and 1366 near the border of the Ostróda commandry with Masovia, at the behest of Günther von Hohenstein.
In 1410, after the Battle of Grunwald, fought just a few kilometers from Olsztynek, the castle was seized by the townspeople and handed over to Władysław II Jagiełło. After being reclaimed by the Teutonic Knights, it was damaged during the Polish–Teutonic War of 1414 and the Thirteen Years’ War.
During the last war between the Order and Poland, in December 1519, Olsztynek was taken by the troops of Crown Hetman Mikołaj Firlej, who, after the garrison of 200 soldiers surrendered, began an occupation of the castle lasting over a year. After the secularization of the Teutonic Order in 1525, the town was incorporated into Ducal Prussia, and the castle became the administrative seat of the princely starost.
In 1651 and 1685, the castle buildings were damaged by fires. By the late 18th century, after renovations, they were converted into offices for the Prussian commissariat, and part of the medieval structures was demolished. Between 1847 and 1849, the remnants were remodeled in a Neo-Gothic style and converted into a gymnasium. After being damaged during World War II, the rebuilt fragments of the castle were incorporated into a school building.
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