By 1371 Falkland belonged to Robert Stewart, Earl of Fife and Menteith, a son of Robert II. Under the title of Duke of Albany he became Regent of Scotland and lived at Falkland as his main residence for thirty-four years. It was here that his nephew, David, Duke of Rothesay, was imprisoned and died, some say in "mysterious circumstances". This was one of the favourite retreats from the cares of government for the Stuart kings and James IV largely rebuilt the structure which he had inherited from his father. James V embellished it further and his bed chamber is still shown to visitors. It was in this room, in which he died in 1542, that he spoke his famous last words "It cam wi' a lass and it'll gang wi' a lass", referring to the Crown of Scotland having come into the Stewart family with Marjory Bruce and leaving it again, as he saw it, with the infant Mary, Queen of Scots, who was only a week old when James died.

There had been a serious fire in the reign of Charles II and the building became a ruin. This did not stop Rob Roy Macgregor occupying the palace for a time during the troubled upheavals of the 1715 Rising. He ravaged the neighbourhood extensively and carried off much loot and booty back to the Braes of Balquhidder.

The palace was saved, like so many other architectural treasures, by the 3rd Marquess of Bute, who bought it and restored it to its present state of splendour in the late nineteenth century. The property is now in the hands of the National Trust for Scotland.