Derenburg was probably founded under the rule of King Henry the Fowler (d. 936 AD), who had a fortified "Königspfalz" erected; the "Taremburch" settlement was first mentioned in a 937 deed issued by his son and successor Otto I. Then part of the Eastphalian region of medieval Saxony, it was even the site of an Imperial Diet convened by Otto's daughter Abbess Matilda of Quedlinburg in 993, while her nephew King Otto III was on campaign in Italy. Derenburg Castle remained a preferred location of the Ottonian dynasty until in 1008 King Henry II ceded the estates to Gandersheim Abbey under his aunt Abbess Sophia. Subsequently, the comital House of Regenstein was enfoeffed with the lordship and the "Pfalz" of Derenburg lost its Imperial status.