During the reign of the Árpád dynasty, Castle Hill served both a residential and a defensive role. Under King Béla IV, its significance grew, but it was not until the reign of King Matthias that Castle Hill was officially appropriated for the use of the rulers. The bastions and its walls were fortified during the Middle Ages and during the country's Turkish occupation; however they were also ultimately destroyed by the Turks. While under Austrian rule, the Castle District underwent significant changes, in keeping with the Baroque style fashionable at the time. Most buildings, including the Matthias Church, fell victim to these trends.
The Fisherman's Bastion as it stands today was built on the foundations of a structure stretching from the so-called "Lookout Tower" to the Jesuit Steps; later, the "Lookout Tower" was replaced by the northernmost main tower of the Fisherman's Bastion.
The name Fisherman's Bastion derives from the simple fact that the structure was situated above a part of Buda known as Fishermen's Village (Halászváros). Generations ago, fishermen used to sell their catch at the fish market operating in the square just next to Matthias Church. In less peaceful times, however, these same fishermen also served as the defenders of the bastion.

The Austrian military saw Fisherman's Bastion primarily as a fortress; and despite minor renovation works, war and nature took a heavy toll on the structure. The Austrians had no intention of making major restorations, and thus, by the time the Bastion had ceased to be used as a fortress in 1874, it had become so outdated that the Ministry of Defence refused to consider any further works to refurbish it.
Then, plans were drawn up for the restoration of the Matthias Church, incorporating an urban renewal scheme for the surroundings of the church. The renovation of Fisherman's Bastion was also placed on the agenda, thanks to the efforts of architect Frigyes Schulek. Work on Fisherman's Bastion commenced in 1899. Conducted in several phases, the renovation of the southern and northern steps was completed in 1901 and 1902, respectively. Renovation work on Fisherman's Bastion was completed in 1905, and the structure was officially presented to the city on 9 October of that year.

During the Second World War, Fisherman's Bastion suffered serious damage in several places. Fortunately, however, the structure had by that time become one of the most emblematic buildings of Budapest, which meant that its restoration could not be put off for long. Overseen by architect László Bors, work on the Bastion was completed in 1953. Following 1990, the city was able to start work on the Bastion again, and set out to completely refurbish the structure. Sadly, however, this work was suspended in 1992. To ensure that the structure would not fall into an even greater state of disrepair, the District 1 Local Government decided in 1994 to continue work on the Fisherman's Bastion, relying on its own resources. The following elements were renovated in this phase: the southern bastion, the Schulek Steps, the southern steps, the buttress wall behind the shrine of the Matthias Church, the pavement surrounding the statue of Saint Stephen and the statues of the six soldiers on the southern steps.
The ribbon cutting for the newly renovated structure took place in 2003. Fisherman's Bastion, as part of the Buda Castle District, has been a World Heritage site since 1987.
In December 2006, the District 1 Local Government announced a public tender for the renovation and utilisation of the northern sections of the Fisherman's Bastion, which is owned by the District.

The restaurant operator Magyar Halászbástya Étteremüzemeltető Limited Liability Company was established in 2007 as the successor of Liget Terasz LLC. The owners' goal was to work together with the District 1 Local Government on the renovation of the section of the Bastion stretching from the northern end to the Lookout Tower, and to eventually operate a first-class restaurant on the premises. The process of obtaining the necessary permits took longer than expected, and working on a historic monument posed further challenges. The project was finally completed in August 2010. The hard work and considerable investment in the project finally paid off: the official opening of the restaurant took place on 23 September 2010. Restored according to the original designs of architect Frigyes Schulek, and now outfitted with state-of-the-art gastronomic facilities, the beautifully renovated establishment covers over 1800 square meters and offers patrons an unforgettable experience in a unique setting.
The process of obtaining the necessary permits took longer than expected, and working on a historic monument posed further challenges. The project was finally completed in August 2010. The hard work and considerable investment in the project finally paid off: the official opening of the restaurant took place on 23 September, 2010. Restored according to the original designs of architect Frigyes Schulek, and now outfitted with state-of-the-art gastronomic facilities, the beautifully renovated establishment covers over 1800 square meters and offers patrons an innovative gourmet culinary experience in a unique setting.