When his line died out, the castle went to Prince-Elector Frederick William, who gifted it to his General, Franz du Hamel.

The king also had a grand palace built for him in Berlin between 1748 and 1753 which now houses the main building of Humboldt University.

In 1786, Georg Friedrich von Boumann and Carl Gotthard Langhans completed the palace to its original plans.

Langhans stayed in Rheinsberg for a few weeks in 1766, and had made plans for Prince Henry, which were implemented in subsequent years by his building director, Carl Wilhelm Hennert.

The Rheinsberg obelisk erected in the early 1790s on the opposite bank of the lake within sight of the palace was intended to honor the memory of Frederick II's and Henry's brother Prince Augustus William of Prussia, who had fallen out of favor, as well as of many officers close to Henry and some of whom were also little appreciated by the king, who in his opinion had rendered outstanding services in the Silesian wars.

Henry had also his tomb built in the form of a broken pyramid in the garden while he was still alive, in which he was buried after his death in 1802.

Since 1991, the Federal and State Rheinsberg Music Academy has been accommodated in the former Cavalier House (Kavaliershaus), and runs the palace theatre.