The Golden Lane originated after the construction of a new northern wall of the Castle. The area of the northern bailey was used for the building of modest dwellings, which are now the last remainder of the small-scale architecture of Prague Castle.
They were inhabited by defenders of the Castle, servants or for example goldsmiths and the Castle marksmen. The tiny houses were occupied until World War II, but already during the period of the First Republic, care was taken to ensure that the picturesque character of the Lane was not changed in the course of modifications. From 1916 to 1917 house No. 22 was inhabited by the writer Franz Kafka.
The appearance of a 16th-century dwelling is best demonstrated by house No. 13, which is a Renaissance home of a member of the guard, so called "Red Musket". In the neighbouring house, No. 14, there lived before World War II a famous fortune-teller "Madame de Thebes", whose clientele was both local and from overseas as is documented in her correspondence. Because of her predictions of a near fall of the Third Reich, she was arrested by the German secret police and died during an interrogation.
The name of the Lane is derived from goldsmiths who used to live there, as can be seen in the house No. 15. In the 16th century, the name "Goldsmith Lane" has been documented which later changed to the present "Golden Lane".
The staircase in house No. 12 affords access to the terrace in front of the tower called Daliborka. This round cannon tower formed a part of the Jagiello fortification system and its bottom floor was used as a prison. The first and also the best-known prisoner was the knight Dalibor of Kozojedy, who was imprisoned here in 1498.