Castleisland was described by one of its most well-known citizens, journalist Con Houlihan, as "not so much a town as a street between two fields".
Castleisland was the centre of Desmond power in Kerry. The village got its name, Castle of the Island of Kerry, from a castle built in 1226 by Geoffrey Maurice (or de Marisco), who was the Lord Justice of Ireland during the reign of King Henry III. The island was created by turning the waters of the River Maine into a moat around the castle.
Sometime in the 120 years after its construction the castle was taken by the forces of the Earl of Desmond. It is known that in 1345 the castle was being held for the Earl of Desmond by Sir Eustace de la Poer and other knights when it was captured by Sir Ralph Ufford, Lord Justice of Ireland. Sir Eustace and the other knights were captured and executed. Little is known of the further history of the castle and few ruins are left of it today. The main ruin is the de Marisco tower, located behind some private houses at the western end of the town, on the Killarney Road.
The Black and Tans and the Irish Republican Army (IRA) were active in Castleisland during the Irish War of Independence in the 1920s. On 9 May 1921, two Royal Irish Constabulary (RIC) men were shot by the IRA outside Castleisland Parish Church; one of the men died. On 10 July in the same year, five IRA men and four British soldiers were killed during a gunfight in the town.