When the Counts of Henneberg became extinct in 1583, their share was inherited byWilliam IV, Landgrave of Hesse-Kassel. William made the town a residence and had Wilhelmsburg Castle erected, finished in 1590. The Lordship of Schmalkalden remained anexclave of Hesse, from 1868 on it was part of thePrussian province ofHesse-Nassau until it was incorporated into theProvince of Saxony in 1944 and in 1945 became part of the State of Thuringia.
The town sustained heavy bomb damage in World War II. From 1949 on, with Thuringia, it formed part ofEast Germany. Afterreunification it attained its present political configuration. In July 2018 the former municipality ofSpringstille was merged into Schmalkalden.