Carol I first visited the site in 1866, the year he arrived in Romania as its new prince. He fell in love with the mountain scenery along the medieval route connecting Transylvania and Wallachia. By 1872, the Crown had purchased five square kilometers near the Piatra Arsa River, and on August 22, 1873, the foundation stone was laid. German architect Johannes Schultz won the commission by proposing something original: a grand alpine castle blending Italian elegance with German Renaissance aesthetics, rather than copying an existing European palace. Construction slowed during the War of Independence against the Ottoman Empire in 1877-1878, but afterward the plans grew more ambitious. Czech architect Karel Liman later added the towers, including the 66-meter central tower, and supervised the neighboring Pelisor Castle for the future King Ferdinand and Queen Marie. The cost between 1875 and 1914 reached an estimated 16 million gold lei, with three to four hundred workers on site at any given time.

Peles Castle is less a single building than an encyclopedia of European decorative arts bound in Carpathian stone. Its 170 rooms are themed by culture and function: the Florentine Room features solid bronze doors cast in Rome and a marble fireplace with Michelangelo motifs. The Moorish Salon, designed by Charles Lecompte de Nouy, fills with mother-of-pearl inlaid furniture and Persian Sarouk rugs. The Turkish Parlor served as a gentlemen's smoking room, its walls covered in Viennese silk brocades. The Playhouse -- a 60-seat theater decorated in Louis XIV style -- bears murals by Gustav Klimt and Franz Matsch. In the Imperial Suite, a tribute to Emperor Franz Joseph I, a five-hundred-year-old Cordoban tooled leather wall covering survives in near-perfect condition. The Grand Armory holds 1,600 of the castle's 4,000 weapons and armor pieces, spanning four centuries, including a complete set of Maximilian horse-and-rider armor and a 15th-century German executioner's sword.

Carol I called Peles the "cradle of the dynasty, cradle of the nation," a phrase that gained literal weight when his grandnephew Carol II was born there in 1893. Artists and intellectuals became regular guests: George Enescu, Sarah Bernhardt, and the poet Vasile Alecsandri visited under the patronage of Queen Elisabeth, herself a published writer under the pen name Carmen Sylva. Kaiser Franz Joseph I of Austria-Hungary came in 1896 and wrote admiringly of the experience. In the 20th century, guests ranged from Richard Nixon and Gerald Ford to Muammar al-Gaddafi and Yasser Arafat. The castle's painting collection grew to nearly 2,000 works, and the seven Italian neo-Renaissance terrace gardens filled with Carrara marble statuary by Raffaello Romanelli. A towering statue of Carol I by the same sculptor still overlooks the main entrance.

After King Michael I was forced to abdicate in 1947, the communist regime seized the entire Peles estate. The castle operated briefly as a museum and a retreat for cultural figures before being declared a full museum in 1953. Nicolae Ceausescu, who disliked the castle, closed the estate entirely between 1975 and 1990, designating it a "State Protocol Interest Area" accessible only to maintenance and military personnel. Dry rot crept into the timbers during the neglect of the 1980s. After the 1989 revolution, Peles and Pelisor reopened as heritage sites. In 2006, the Romanian government returned the Royal Domain to King Michael I; negotiations concluded in 2007 with the castle leased back to the state. Today it draws between 250,000 and nearly half a million visitors annually. On Monarchy Day 2016, a royal standard flew from Peles for the first time in almost 70 years. In December 2017, Michael I himself lay in state in the Hall of Honour before his state funeral in Bucharest.