In 1868 the ruins of the medieval twin castles were demolished completely. The remains of the old keep were blown up. The foundation stone for the Palas was laid on September 5, 1869. In 1872 its cellar was completed and in 1876 everything up to the first floor. The Gatehouse was finished first, at the end of 1873, allowing Ludwig to take provisional lodgings there and observe the further construction work.
In 1874 direction of the civil works passed from Eduard Riedel to Georg von Dollmann. The topping out ceremony for the Palas took place in 1880, and in 1884 the king was able to move into the new building. In the same year the direction of the project passed to Julius Hofmann, after Dollmann had fallen into disgrace.
The palace was erected as a conventional brick construction and later encased with other types of stone. The white lime stone used for the facades came from a nearby quarry. The sandstone bricks for the portals and bay windows came from Schlaitdorf in Württemberg. Marble from Untersberg near Salzburg was used for the windows, the arch ribs, the columns and the capitals. The Throne Hall was a later addition to the plans and required a steel framework.
Transport of building materials was facilitated by a scaffolding and a steam crane that lifted the material to the construction site. Another crane was used at the construction site itself.
Despite its size, Neuschwanstein did not have space for the royal court, but contained only the king's private lodging and servants' rooms. The court buildings served decorative, rather than residential purposes. The palace was intended to serve Ludwig II as a sort of inhabitable theatrical setting. As a temple of friendship it was also devoted to life and work of Richard Wagner, who died in 1883 before he had set foot in the building. In the end, Ludwig II only lived in the palace for a total of 172 days
The effect of the Neuschwanstein ensemble is highly theatrical, both externally and internally. The king's influence is apparent throughout, as he took a keen personal interest in the design and decoration. An example can be seen in his commands regarding a mural depicting Lohengrin in the Palas; "His Majesty wishes that … the ship be placed further from the shore, that Lohengrin's neck be less tilted, that the chain from the ship to the swan be of gold and not of roses, and finally that the style of the castle shall be kept medieval."
The suite of rooms within the Palas contains the Throne Room, Ludwig's suite, the Singers' Hall, and the Grotto. Throughout, the design pays homage to the German legends of Lohengrin, the Swan Knight. Hohenschwangau, where Ludwig spent much of his youth, had decorations of these sagas. These themes were taken up in the operas of Richard Wagner.
Many rooms bear a border depicting the various operas written by Wagner, including a theatre permanently featuring the set of one such play. Many of the interior rooms remain undecorated, with only 14 rooms finished before Ludwig's death.
One of the major features of the palace remained unbuilt. A massive keep was planned for the middle of the upper courtyard but was never built, at the decision of the King's family. The foundation for the keep is visible in the upper courtyard.
Neuschwanstein Castle consists of several individual structures which were erected over a length of 150 metres on the top of a cliff ridge. The elongate building is furnished with numerous towers, ornamental turrets, gables, balconies, pinnacles and sculptures.
Following Romanesque style, most window openings are fashioned as bi- and triforia. Before the backdrop of the Tegelberg and the Pöllat Gorge in the south and the Alpine foothills with their lakes in the north, the ensemble of individual buildings provides varying picturesque views of the palace from all directions. It was designed as the romantic ideal of a knights' castle. Unlike "real" castles, whose building stock is in most cases the result of centuries of building activity, Neuschwanstein was planned from the inception as an intentionally asymmetric building, and erected in consecutive stages. Typical attributes of a castle were cited, but real fortifications – the most important feature of a medieval aristocratic estate – were dispensed with.
The palace complex is entered through the symmetrical Gatehouse flanked by stair towers. The eastward-pointing gate building is the only structure of the palace whose wall area is fashioned in high-contrast colours; the exterior walls are cased with red bricks, the court fronts with yellow lime stone. The roof cornice is surrounded by pinnacles. The upper floor of the Gatehouse is surmounted by a crow-stepped gable and held Ludwig II's first lodging at Neuschwanstein, from which he occasionally observed the building work before the hall was completed. The ground floors of the Gatehouse were intended to accommodate the stables.
The passage through the Gatehouse, crowned with the royal Bavarian coat of arms, leads directly into the courtyard. The courtyard has two levels, the lower one being defined to the east by the Gatehouse and to the north by the foundations of the so-called Rectangular Tower and by the gallery building. The southern end of the courtyard is open, imparting a view of the surrounding mountain scenery. At its western end the courtyard is delimited by a bricked embankment, whose polygonally protracting bulge marks the choir of the originally projected chapel. A flight of steps at the side gives access to the upper level.
The most striking structure of the upper court level is the so-called Rectangular Tower (45 metres). It mostly serves a decorative purpose as part of the ensemble. Its viewing platform provides a vast view over the Alpine foothills to the north. The northern end of the upper courtyard is defined by the so-called Knights' House. The three-story building is connected to the Rectangular Tower and the Gatehouse by means of a continuous gallery fashioned with a blind arcade. From the point of view of castle romanticism the Knights' House was the abode of a stronghold's menfolk; at Neuschwanstein, estate and service rooms were envisioned here.
The Bower, which complements the Knights' House as the "ladies' house" but was never used as such, defines the south side of the court yard. Both structures together form the motif of the Antwerp Castle featuring in the first act of Lohengrin. Embedded in the pavement is the floor plan of the planned palace chapel.
The western end of the courtyard is delimited by the Palas (hall). It constitutes the real main and residential building of the castle and contains the king's stateroom and the servants' rooms. The Palas is a colossal five-story structure in the shape of two huge cuboids connected in a flat angle and covered by two adjacent high gable roofs. The building's shape follows the course of the ridge. In its corners there are two stair towers, the northern one surmounting the palace roof by several stories with its height of 65 metres. With their polymorphic roofs, both towers are reminiscent of the Château de Pierrefonds. The western Palas front supports a two-story balcony with view on the Alpsee, while northwards a low chair tower and the conservatory protract from the main structure.
The entire Palas is spangled with numerous decorative chimneys and ornamental turrets, the court front with colourful frescos. The court-side gable is crowned with a copper lion, the western (outward) gable with the likeness of a knight.
Had it been completed, the palace would have had more than 200 interior rooms, including premises for guests and servants as well as for service and logistics. Ultimately, no more than about 15 rooms and halls were finished. In its lower stories the Palas accommodates administrative and servants' rooms and the rooms of today's palace administration.
The king's staterooms are situated in the upper stories: The anterior structure accommodates the lodgings in the third floor, above them the Hall of the Singers. The upper floors of the west-facing posterior structure are filled almost completely by the Throne Hall. The total floor space of all floors amounts to nearly 6000 square metres.
Neuschwanstein houses numerous significant interior rooms of German historicism. The palace was fitted with the latest technical innovations of the late 19th century. Among other things it had a battery-powered bell system for the servants and telephone lines. The kitchen equipment included a Rumford oven which turned the skewer with its heat and so automatically adjusted the turning speed. The hot air was used for a calorifère central heating system. Further novelties for the era were running warm water and toilets with automatic flushing.
The largest room of the palace is the Hall of the Singers, followed by the Throne Hall. The 27 metres by 10 metres Hall of the Singers is located in the eastern, court-side wing of the Palas, in the fourth floor above the king's lodgings. It is designed as an amalgamation of two rooms of the Wartburg: The Hall of the Singers and the Ballroom. It was one of the king's favourite projects for his palace. The rectangular room was decorated with themes from Lohengrin and Parzival. Its longer side is terminated by a gallery which is crowned by a tribune, modelled after the Wartburg. The eastern narrow side is terminated by a stage which is structured by arcades and known as the sängerlaube.
The Hall of the Singers was never designed for court festivities of the reclusive king. Rather, like the Throne Hall it served as a walkable monument in which the culture of knights and courtly love of the Middle Ages was represented. The first performance in this hall took place in 1933: a concert commemorating the 50th anniversary of Richard Wagner's death.
The Throne Hall, 20 metres by 12 metres, is situated in the west wing of the Palas. With its height of 13 metres it occupies the third and fourth floors.. On three sides it is surrounded by colourful arcades, ending in an apse that was intended to hold Ludwig's throne – which was never completed. The throne dais is surrounded by paintings of Jesus, the Twelve Apostles and six canonised kings. The mural paintings were created by Wilhelm Hauschild. The floor mosaic was completed after the king's death. The chandelier is fashioned after a Byzantine crown. The Throne Hall makes a sacral impression. Following the king's wish, it amalgamated the Grail Hall from Parzival with a symbol of the divine right of kings, an incorporation of unrestricted sovereign power, which Ludwig as the head of a constitutional monarchy no longer held.
Apart from the large ceremonial rooms several smaller rooms were created for use by Ludwig II. The royal lodging is on the third floor of the palace in the east wing of the Palas. It consists of eight rooms with living space and several smaller rooms. In spite of the gaudy décor, the living space with its moderate room size and its sofas and suites makes a relatively modern impression on today's visitors. Ludwig II did not attach importance on representative requirements of former times, in which the life of a monarch was mostly public. The interior decoration with mural paintings, tapestry, furniture and other handicraft generally refers to the king's favourite themes: the grail legend, the works of Wolfram von Eschenbach, and their interpretation by Richard Wagner.
The eastward drawing room is adorned with themes from the Lohengrin legend. The furniture is comfortable and homelike. Next to the drawing room is a little artificial grotto that forms the passage to the study. The unusual room, originally equipped with an artificial waterfall and a rainbow machine, is connected to a little conservatory. Depicting the Hörselberg grotto, it relates to Wagner's Tannhäuser, as does the décor of the adjacent study. (In the park of Linderhof Palace the king had installed a similar grotto of greater dimensions). Opposite the study is the dining room, adorned with themes of courtly love.
Since the kitchen in Neuschwanstein is situated three stories below the dining room, it was impossible to install a wishing table (dining table disappearing by means of a mechanism) as at Linderhof Palace and Herrenchiemsee. Instead, the dining room was connected with the kitchen by means of a service lift.
The bedroom adjacent to the dining room and the subsequent house chapel are the only rooms of the palace that remain in neo-Gothic style. The king's bedroom is dominated by a huge bed adorned with carvings. Fourteen carvers worked more than four years on the bed canopy with its numerous pinnacles and on the oaken panelings. It was in this room that Ludwig was arrested in the night from 11 to 12 June 1886. The adjacent little house chapel is consecrated to Saint Louis, after whom the owner was named.
The servants' rooms in the basement of the Palas are quite scantily equipped with massive oak furniture. Besides one table and one cabinet there are two beds of 1.80 metres length each. Opaque glass windows separated the rooms from the corridor that connects the exterior stairs with the main stairs, so that the king could enter and leave unseen. As in all great houses, servants were not allowed to use the main stairs, but were restricted to servants' stairs.
For about two decades the construction site was the principal employer of the region. In 1880 about 200 craftsmen were occupied at the site, not counting suppliers and other persons indirectly involved in the construction. At times when the king insisted on particularly close deadlines and urgent changes, reportedly up to 300 workers per day were active, sometimes at night by the light of oil lamps.