It is part of the larger Falkenstein fortification complex; while the main fortress of Oberfalkenstein today is a ruin, the lower barbican of Niederfalkenstein is largely preserved.

The fortification was erected on a rocky promontory on the southwestern slopes of the Reisseck Group in the Hohe Tauern mountain range, overlooking the Möll valley east of Obervellach.

The first documented ministerialis Gumpoldus de Valchenstein was a liensmen of Count Engelbert II of Gorizia (Görz), scion of the Meinhardiner dynasty.

The Counts of Gorizia also held the office of a Vogt of the Benedictine Millstatt Abbey, and the Lord of Falkenstein established close ties to the monastery.

In 1504 Frederick's son and successor Emperor Maximilian I again pawned the castle to Count Julian of Lodron, by his wife Apollonia brother-in-law of the Salzburg archbishop Matthäus Lang von Wellenburg.