Inspired by a trip to Italy, Duke John of Saxony had a Renaissance garden laid out to the east of the castle hill from 1592. Regular quarters and plant arrangements were created, which were soon praised by chroniclers. During the reign of Duke Frederick II of Saxe-Gotha-Altenburg, the castle garden was expanded into a well-tended Baroque garden. From then on, the garden was the site of numerous sumptuous processions, festivals, theater performances and carefree amusements.

Under Frederick II and his art-loving wife, the Saxon princess Magdalena Sibylle, previous buildings were replaced by a teahouse and orangery. The Zeitz master builder Johann Heinrich Gengenbach had provided the plans for this. Today, however, only the remains of the walls bear witness to the former Schönhaus, the „Lusthaus im Wäldchen”, built from 1730. After years of neglect, it was demolished in 1955. From 1787, under Duke Ernst II of Saxe-Gotha-Altenburg, a landscape garden based on the English model was created, promoted by the Altenburg Privy Councillor von Thümmel. It was designed in its present form between 1827 and 1839 under the influence of Peter Joseph Lenné. The palace garden theater was originally located at the edge of the palace garden, near the stables. Today, efforts by the town of Altenburg and the Teahouse Association are focused on preserving and revitalizing the teahouse and orangery. Extensive measures are underway to secure and restore them.

The castle garden of today is alive with old trees. Winding paths lead to remarkable buildings that appear behind the trees. These include the Lindenau Museum (1874/76), the Mauritianum Natural History Museum (1908) and the Duchess Agnes Memorial Church, consecrated in 1906.

The castle and playing card museum offers guided tours of the charming castle garden and its buildings during the summer months.