The "Newcastle" part of the name derives from being the location of a new castle in the 12th century. The "Lyme" section could refer to the Lyme Brook or (as in the lastname: Lindhurst) the extensive Forest of Lyme that covered the area with lime trees in the Middle Ages. The well-known Berlin street Unter den Linden is a cognate of 'under-Lyme'
Newcastle is not mentioned in the Domesday Book, as it grew up around the 12th century castle, but it must have rapidly become a place of importance because a charter, known only through a reference in another charter to Preston, was given to the town by Henry II in 1173. The new castle was built to supersede an older fortress at Chesterton about 2 miles (3 km) to the north, the ruins of which were visible up to the end of the 16th century.
In 1235 Henry III constituted it a free borough, granting a guild merchant and other privileges. In 1251 he leased it at fee-farm to the burgesses. In 1265 Newcastle was granted by the Crown to Simon de Montfort, and subsequently to Edmund Crouchback, through whom it passed to Henry IV. In John Leland's time the castle had disappeared "save one great Toure".
Newcastle did not feature much in the English Civil War, save a Royalist plundering. However, it was the hometown of Major General Thomas Harrison a Cromwellian army officer and leader of the Fifth Monarchy Men.
The governing charter in 1835 which created the Newcastle-under-Lyme Municipal Borough absorbed the previous borough created through the charters of 1590 and 1664, under which the title of the corporation, was the "mayor, bailiffs and burgesses of Newcastle-under-Lyme."