Near the old castle, on a western branch of the Elde, Duke Adolf Friedrich I had a new castle built for Neustadt-Glewe in 1618/19. In the future, this was to serve as a secondary residence for the dukes of Mecklenburg in place of the castle.
Due to its location on the Elde River, the Baroque castle was founded on hundreds of oak piles. The plans for the two-story, three-wing complex in the style of Dutch classicism were drawn up by the ducal master builder Gerhardt Evert Pilooth, who, however, died only a few years after construction began. It was to take almost one hundred years before the building could finally be completed. The interior alone took eight years to complete. Among other things, 1,600 square meters of ceiling space in the otherwise rather plain country palace were decorated with elaborate stucco work and 32 fireplaces were built with rosettes, cornices and figures. Christian Ludwig II, later Duke of Mecklenburg-Schwerin, lived here for a few years from 1725 to 1735.
After the Second World War, the castle temporarily became a place of residence for refugees and homeless people. Finally, in GDR times, the castle was used for educational purposes, and later as a library and lunch kitchen. However, the building, which rests on piles, increasingly deteriorated and threatened to sink, so that it was temporarily empty after the fall of the Wall. After extensive renovation work beginning in the mid-1990s, the restored castle now houses a hotel. The lovingly restored stucco ceilings, which Polish specialists restored to their original state, are particularly worth seeing.