The modern city grew around a medieval 12th century fortress (Italian: castello) and a large fishery, from which it acquired its designation.

Today Castiglione is a very popular tourist destination with attractions that include beaches, natural parks, biking trails, historical Etruscan archaeological sites, a panoramic mediaeval hamlet as well as the natural reserve Diaccia Botrona, a swampy humid environment of historical relevance whose endangered wildlife comprise pink flamingoes, mallards and ducks.

Notably, in 2015 Castiglione's sea was nominated as Italy's most beautiful by the national non-governmental environmentalist organisation Legambiente, which not only praised the town's seawater cleanliness but also its environmental efforts and efficient recycling.

The city requested protection from various powers (Siena, the Medici, Aragon) and finally became part of the Grand Duchy of Tuscany under the House of Habsburg-Lorraine.

Furthermore, the hamlets of Punta Ala, Riva del Sole, Roccamare and Rocchette are beach resorts catering mostly tourists from Central and Northern Europe.

In the territory of Castiglione della Pescaia, the 1,000-hectare (2,500-acre) Natural Reserve of Diaccia Botrona (with 18th-century Casa Rossa Ximenes) is a designated wetland area of international interest, according to the Ramsar Convention.