On these premises, a bit off of the centre of Otterndorf, there had been a fortification since the late Middle Ages, the location of which can still be recognised today by the castle moats. Around 1400 this first castle went up in flames, as the Archbishop of Bremen once again fought against the Saxon dukes for control of Hadeln. But, since the Hanseatic City of Hamburg and its merchants were keen to establish stable conditions on the coasts of the mouth of the Elbe, they intervened as soon as the opportunity arose. The dukes of Lauenburg were constantly short of money, so they unceremoniously mortgaged the land of Hadeln to the Hamburgers. It was a win-win situation: Hamburg thus had a hand in the territory that was important to them, while the Lauenburg dukes not only got rid of their worst embarrassments, but also saved the county Hadeln from the grip of the archbishop of Bremen.

During the course of this arrangement, a fortified castle was built on the grounds of the destroyed castle in Otterndorf and in 1408 even a Hamburg bailiff was appointed. In the long run, however, the people of Hadeln were not very satisfied with the rule of the Hamburgers, as they spoiled the Hadelers’ wheat trade with Holland and began to restrict their old liberties. Therefore, they were extremely happy when the Lauenburg dukes finally redeemed the pledge after almost 100 years, took over reign again and reaffirmed the Hadelers’ traditional privileges.

During the Thirty Years' War, the fortifications were even extended and strengthened but due to the changes in military technology during the following decades, the many small fortifications that had existed everywhere in Germany became increasingly insignificant. In order to maintain the Otterndorf Castle as a residence it would have required a ruling dynasty that had wanted to reside there, and this was no longer an option – at least when the electors of Hanover acquired the county Hadeln at the beginning of the 18th century.

The castle, which had long become dilapidated, was finally replaced in 1773 by district offices, which still stand on this spot today between hilly lawns and old trees.
However, the state authority remained at this locality even after all these long centuries. Since 1885, the district court of Otterndorf is located here.