It belonged to the imperially immediate territory of the Duchy of Mecklenburg within the Holy Roman Empire.

It was formed from the territory of the former Prince-Bishopric of Ratzeburg, which was secularised to Mecklenburg-Güstrow in the 1648 Peace of Westphalia.

Following the death of the last duke in 1695, the territories of Mecklenburg-Güstrow were split up in the 1701 Treaty of Hamburg (the third partition of Mecklenburg), which created the semi-ducal states of Mecklenburg-Schwerin and Mecklenburg-Strelitz, with the latter made up of the Principality of Ratzeburg and the Lordship of Stargard.

Its territories remained exclaves of Mecklenburg-Strelitz through its later iterations – the Grand Duchy from 1815 and Free State from 1918 – before the bulk of it was finally incorporated into the unified state of Mecklenburg in 1934 as part of Landkreis Schönberg [de]; its small exclaves were incorporated into Kreis Herzogtum Lauenburg of Schleswig-Holstein.

Most of the Principality is now within the state of Mecklenburg-Vorpommern.