Lauenstein fort was built towards the end of the 12th century on a triangular rocky outcrop above the Müglitz river, presumably for the purposes of border security. Between 1517 and 1821, the castle and city of Lauenstein were owned by the aristocratic von Bünau family, a vast Saxon dynasty in the German and Bohemian region. The family had a far-reaching influence over cultural and economic development in the Eastern Ore Mountains. Lauenstein Castle fell victim to the devastating city fire of 2 May 1594, though castle and property owner, Günther von Bünau (1557-1619), who had taken over Lauenstein after the fire, later had the castle and church rebuilt. A museum to be housed in the castle was opened in 1980 after extensive repair and preservation work has been done. The fort ruins were stabilized and the grounds reconstructed during the 1990s.
Lauenstein Castle is divided into various sections. The main castle joins parts of the medieval fort ruins perched high above the Müglitztal Valley, on a steep rocky outcrop in the northern districts. The central, medieval castle consisted of a great hall and a gate tower. Two barrel-vaulted areas in both the cellar and ground floor have been preserved, as have a five-metre-deep prison (Unger), a so-called guard chamber, and the wall ruins from the former great hall. The two circular and semi-circular towers on the eastern side, as well as the square tower on the south-eastern side, which were incorporated when the structure was transformed into a Renaissance castle, are evidence of the curtain wall erected in the 2nd half of the 13th century. The main part of the castle is accessed via a sandstone gateway, which is elaborately decorated, featuring a depiction of a stylised mine opening with two working miners, as well as the emblems of the von Bünau and von Schleinitz families.