The history of Mergentheim Palace begins in the 12th century, when the Counts of Lauda [de] built a castle on the east side of a village called Mergintaim.

The Teutonic Knights were given extensive rights in and over Mergentheim, including the limiting of the citizenry's ability to make legal appeals to the local courts, by Louis IV, Holy Roman Emperor in 1340.

[2] On 26 March 1524, the citizens of Mergentheim, participating in the German Peasants' War, rose in revolt to the Teutonic Order and sacked one of their properties in the town.

[3] In response to the loss of Horneck Castle, the Franconian bailiwick offered Mergentheim as a residence to the German Master, Walter von Cronberg, in 1527.

[4] This arrangement was provisional until the loss of Prussia became inexorable with the destruction of the Livonian Order in 1561,[2] obliging the Grand Master to remain in Mergentheim.

Maximilian III, Archduke of Austria, as Grand Master of the Teutonic Order, established a seminary on the grounds of Mergentheim Palace in 1606–07.

Francis Louis, who go on to hold five high ecclesiastical offices and extensively reform the Order, rarely spent time at Mergentheim.

[2] In 1827, Duke Paul Wilhelm of Württemberg received Mergentheim Palace as his residence following his marriage to Princess Maria Sophia of Thurn and Taxis.

Paul Wilhelm, a natural scientist and explorer, displayed ethnological, zoological, and botanical specimens and curios collected in his travels in twenty of the palace's rooms.

[13] The palace comprises two ringed complexes, the inner residential and the outer administrative,[14] that together cover an area of 3,000 square meters (32,000 sq ft).

[14] The palace was again expanded, and remodeled in the Baroque style, by Grand Masters Francis Louis of Palatinate-Neuburg and Clemens August of Bavaria.

The ceiling fresco, Glorification of the Cross in Heaven and on Earth, was painted by Munich court painter Johann Nikolaus Stuber.

The decoration of the hall's interior is military in character, with stucco reliefs of timpani, trumpets, trophies of arms, and representative symbols for the continents of Europe, Asia, Africa, and the Americas.

According to Adelsheim's wishes, the collection was displayed in a room in Bad Mergentheim's town hall,[20] and it was expanded in subsequent years by donations.

[22] A portion of the Teutonic Order Museum is a permanent exhibit on local Jewish history, with a focus on brothers Feilx and Hermann Fechenbach [de], who were born in Mergentheim.