It is located on the Helme river north of the Kyffhäuser mountain range and the border with Thuringia.

The municipality consists of the 4 villages Wallhausen, Hohlstedt, Martinsrieth and Riethnordhausen.

King Otto III gave the castle to his aunt Abbess Matilda of Quedlinburg in 985.

Wallhausen later was a possession of the Saxon Electorate, it became part of the Prussian Province of Saxony in 1815.

Wallhausen Castle was owned by the House of Asseburg from 1414 until the expropriation in the Soviet occupation zone in 1945.