The village of Castletown lies a short distance inland from the southern corner of Dunnet Bay, five miles east of Thurso. Dunnet Bay faces north-west and is protected to the north by the bulk of Dunnet Head. The bay's south-eastern side is bounded by a beautiful two mile long beach backed by high dunes. The southern end of the beach expires at the mouth of a stream, once used to power the huge, but now ruinous, Castletown Mill.
The origins of settlement in the area date back at least as far as the remains of an Iron Age broch on the coast to the west of the village. Later residents would certainly have included the Norse, and by medieval times there was a church in Kirkton of Olrig serving the parish of Olrig. The village of Castletown was a late arrival. In the early 1800s James Traill of Rattar, Sheriff-Depute of Caithness and owner of substantial estates in the area conceived the idea of opening up a series of quarries on his land. One of the largest of these quarries was opened up at Castlehill, between Castletown and the shore of Dunnet Bay.
By the 1820s Traill was engaged in the large scale extraction of flagstone at Castlehill: whose name, incidentally, suggests the possibility of an earlier castle in the area, unless it is a reference to the nearby broch on the shore. Either way, Traill also built Castlehill House not far from the shore and the quarry to serve as his place of residence in the area. And in 1820 work began on the construction of Castlehill Harbour, intended to allow the easy transport of flagstones from the local quarries to destinations throughout the British Isles and far beyond: Castlehill flagstone found use in places as far afield as South America and Australia. The first cargo of flagstones left Castlehill Harbour in April 1825: many more were to follow.
The workers in Traill's quarry and their families needed somewhere to live, and Traill established a planned village built to a grid pattern inland from Castlehill. This became Castletown and by 1825 was substantially complete. Traill also built Castletown Mill in 1818 to process corn from the surrounding area. Close by is the car park at the end of the beach footpath. This was opened in 2000 and gives access to the excellent beach and dune area to the north-east.
The 100 people employed in Castletown's flagstone industry in 1825 had increased to 500 by the peak year of 1902, when 35,363 tonnes of flag were produced, worth £23,239. But by the 1920s concrete paving stones had largely replaced the natural material and the industry died.
Today's Castletown is a neat village built largely, as you would expect, from the local stone. A series of imposing buildings dominate the centre of the village. The Castletown Hotel, previously known as the St Clair Arms Hotel, retains a very traditional appearance. On the opposite corner of the main crossroads in the village is a conveniently located car park, and north-east of this is Castletown Drill Hall, which presents a very Scots Baronial face to the world. Castletown is also home to several shops and other facilities, including the well kept Castletown Football Club.
Castletown's industrial past is celebrated by the Flagstone Heritage Trail and the Castlehill Heritage Centre. The first of these leads you through the surviving buildings from the quarry at Castlehill en route to the still functional harbour. The heritage centre has background on the flagstone industry and other aspects of local history. It is housed in a farm steading close to the slate quarry at Castlehill, and close to the ruins of Castlehill House, which sadly burned down in 1967.
A mile and a half south-east of Castletown is the site of what was once RAF Castletown. This opened in 1940 as a base for fighter aircraft defending Scapa Flow on Orkney. Although the base closed by mid 1945, parts of its runways can still be seen on the ground, along with remains of some of the buildings.