The oldest surviving structure on the castle site dates to the 11th century, although evidence exists of some form of stronghold predating the Norman Conquest. Edward the Martyr was assassinated at the site on 18 March 978.

The Domesday Book records one castle in Dorset; the entry, which reads "Of the manor of Kingston the King has one hide on which he built Wareham castle", is is thought to refer to Corfe rather than the timber castle at Wareham.[1] There are 48 castles directly mentioned in the Domesday Book, although not all those in existence at the time were recorded.[2] Assuming that Corfe is the castle in question, it is one of four the Domesday Book attributes to William the Conqueror; the survey explicitly mentions seven people as having built castles, of which William is the most prolific.[3] One of the secondary roles of castles was to act as a storage facility as demonstrated by Corfe Castle; in 1224 Henry III sent to Corfe for 15,000 crossbow bolts to be used in the siege of Bedford Castle.[4]

Construction of a stone hall and inner bailey wall occurred in the 11th century and extensive construction of other towers, halls and walls occurred during the reigns of Henry I, John and Henry III. By the 13th century the castle was being used as a royal treasure storehouse and prison. Refortified in 1202 1204, the west bailey at Corfe Castle resembles the bailey of Château Gaillard, built by Richard the Lionheart in 1198.[5] In 1210, after she angered King John of England, Maud de Braose and her eldest son William were walled alive inside the castle dungeon, where they both starved to death. John used the castle to keep his most important prisoners, among them were: Eleanor of Brittany, elder sister of the murdered prince Arthur and thus the rightful heiress to England, confined there for quite some years since about 1202, before being transferred to other castles at the beginning of the reign of King Henry III; Princesses Margaret and Isobel, daughters of King William I of Scotland sent as hostages.

In December 1460, during the Wars of the Roses Edmund Beaufort and his army marched from the castle destined for the Battle of Wakefield. During the march the army split at Exeter so the cavalry could reach the north quicker and on 16th December 1460 some of his men became embroiled in the Battle of Worksop, Nottinghamshire. Beaufort and the Lancastrians won the skirmish.

The castle remained a royal fortress until sold by Elizabeth I in the 16th century to her Lord Chancellor, Sir Christopher Hatton.

The castle was bought by Sir John Bankes, Attorney General to Charles I, in 1635. During the English Civil War, the castle twice came under siege by Parliamentarian forces. Sir John Bankes was away from his estate attending to Charles I so defence of the castle was led by his wife Lady Mary Bankes "Brave Dame Mary" as she became known.

The first siege, in 1643, lasted for six weeks before the Parliamentarians withdrew with the loss of 100 men. The second siege, in 1646, was resisted for two months before the castle was betrayed by a member of the garrison. After its capture, the castle was slighted with some explosives and mainly by undermining to ensure that it could never stand again as a Royalist stronghold. In the centuries that followed, the local populace took advantage of this easy source of building material and masonry; door frames and other items originally from the castle can be seen in a number of nearby houses.

After the restoration of the monarchy in 1660, the Bankes family regained their properties. Rather than rebuild or replace the ruined castle they chose to build a new house at Kingston Lacy on their other Dorset estate near Wimborne Minster.

Corfe castle is considered to be the inspiration for Enid Blyton's Kirrin Island[6], which had its own similar castle.