Barnard Castle is named after the men that built the stone castle and founded the town. In 1125 Bernard de Balliol succeeded to the lands first given to Guy de Balliol in 1095. The original timber castle was rebuilt in stone and expanded by Bernard and his younger son, Bernard de Balliol II. The large castle is built high on rocky cliffs above the River Tees, and is divided into four wards all walled in stone. The inner ward is protected by a deep ditch cut into the rock and within this ward are the remains of the most important castle buildings including the Round Tower and the Great Hall.

In 1216 Hugh de Balliol helped King John defend the North against a revolt by Northumbrian barons who were supported by Alexander I, King of Scotland. In July Barnard was besieged by Alexander's forces. Little is known about this siege although it appears to have been unsuccessful, and it claimed the life of Alexander's brother-in-law, Eustace de Vesci, killed by a crossbow bolt fired from the castle. Hugh died in 1228, and was succeeded by his son, John de Balliol. John gained land and titles in Scotland through his marriage to Devorguilla of Galloway, and this allowed his son, John de Balliol II, to become a contender for the vacant Scottish throne in 1292. A council of Scottish and English lords, convened by King Edward I, chose John as the new king. He swore loyalty to Edward, but once in power rejected the authority of the English king. In 1296 Edward marched to Scotland and John surrendered his right to the Scottish throne and was imprisoned in the Tower of London. All of his English estates were confiscated, although he was later allowed to retire to his family estates in Picardy.

The castle was not well maintained by subsequent owners, including the Beauchamps and Nevills, who regarded it more as a source of revenue. In 1569, during the 'Rising of the North', in which rebels planned to depose the protestant Elizabeth I and replace her with the catholic, Mary, Queen of Scots, Barnard was besieged by 5000 rebels. Sir George Bowes was unable to stop his men from leaving the castle and was forced to surrender. Following this siege the castle continued to fall into ruin. In 1630 it was sold to Sir Henry Vane who used the castle as a source of materials for extensive improvements he was making to his main residence at Raby Castle.