Grand Duke William II sought to establish a suitable Grand Ducal residence in Luxembourg, hoping that a division of his time between The Hague and Luxembourg would placate the local, overwhelmingly Roman Catholic, population.

In 1906, William IV had the old castle demolished and a new one constructed in its place, designed by the Munich-based architect Max Ostenrieder and the local Pierre Funck-Eydt.

[1] Work on the new castle began in 1907, and was completed on 9 September 1911, after which it became the primary residence of the Grand Ducal family.

[2] Berg is now one of two properties covered by similar agreements (the other being the Grand Ducal Palace in Luxembourg City).

During this period, the most valuable works of art were stolen from the castle, and the building itself underwent major alterations to suit the Nazis' purpose of re-educating local girls.