The rebuilding of Montgomery Castle in stone was commenced in the late summer of 1223 on the sixteenth birthday of Henry III of England, a mile to the south-east of the original site. The architect of the new castle was Hubert de Burgh who also rebuilt Skenfrith Castle, Grosmont Castle and White Castle in the Welsh Marches. From 1223 until 1228 masons worked solidly building the entire inner ward, or donjon as it was then known on a great rock above the later town of Montgomery. This work consisted of the gatehouse, two D-shaped towers and the apartments which crowded around the curtain wall of the inner ward. After an unsuccessful attack by Prince Llywelyn ab Iorwerth in 1228 the middle and outer wards were added to the castle. The castle was again attacked in 1233 which resulted in damage to the Well Tower which had to be subsequently repaired and re-roofed.
In 1267 Montgomery was the meeting place for treaty negotiations, where King Henry III granted Llywelyn ap Gruffydd the title of prince of Wales. Fifteen years later in December 1282 the army of Montgomery marched from here to Builth Wells to surprise and kill Llywelyn. After 1295 and the final Welsh War of the thirteenth century the castle became more of a military backwater and prison than a front line fortress.
Montgomery was granted a Royal Charter by the King in 1227, making it the oldest borough in Wales.