Valga is first mentioned as a meeting point of tradesmen in the Riga Credit Book of 1286, but it got its city rights only in 1584 from the king of Poland, Stefan (István) Bathory, who was originally Hungarian. To commemorate this, a monument to Stefan Bathory was opened opposite St John's church in the centre of the town in 2003.
First record of Kastelholma (or Kastelholm) castle is from the year 1388 in the contract of Queen Margaret I of Denmark, where a large portion of the inheritance of Bo Jonsson Grip was given to the queen. The heyday of the castle was in the 15th and 16th centuries when it was administrated by Danish and Swedish kings and stewards of the realms. Kastelhoma was expanded and enhanced several times.
In the end of 16th century castle was owned by the previous queen Catherine Jagellon (Stenbock), an enemy of the King of Sweden Eric XIV. King Eric conquered Kastelholma in 1599 and all defending officers were taken to Turku and executed. The castle was damaged under the siege and it took 30 years to renovate it.
In 1634 Åland was joined with the County of Åbo and Björneborg and Kastelholma lost its administrative status.