The principality was located on the southwestern edge of the Harz mountain range in present-day South Lower Saxony.

Grubenhagen was split off from the Brunswick Principality of Wolfenbüttel in 1291, when the sons of late Duke Albert the Tall (1236–1279) finally divided their heritage.

The ongoing fragmentation weakened the position of the Grubenhagen branch regarding estate distributions involving their Wolfenbüttel, Lüneburg and Calenberg cousins.

The territory was disputed by the different lines of the Welf dynasty: Duke Henry Julius, Prince of Wolfenbüttel, occupied Grubenhagen; his son Frederick Ulrich, however, had to cede it to Duke Christian, Prince of Lüneburg according to a 1617 ruling of the Imperial Chamber Court (Reichskammergericht) at Speyer.

With the Principality of Lüneburg, the Grubenhagen territory was finally inherited by Duke Christian Louis, Prince of Calenberg, in 1648.