The Monastery of the Protection of the Most Holy Theotokos was founded in 1398 around the old Protection Church. In the same year, Ustyug suffered a devastating raid by the Novgorodians, who burned the settlement and the Assumption Cathedral, as well as took away the best Ustyug icons, including the icon of the Most Holy Theotokos Odigitria. These events likely led to the establishment of a new urban monastery around the old Protection Church. In 1399, the first fortifications were built on the elevation formed by the Sukhona River and a ravine where a stream flows. Due to frequent raids and its strategically advantageous position, the monastery was built as a fortress. A deep moat was dug on the northern side, and earthen ramparts were raised around the monastery, which have survived to this day. Thus, the monastery became an impregnable island surrounded by water, and by the end of the 14th century, it acquired military functions, turning into the main citadel of the city.

In literature about Veliky Ustyug, there is often a version by V. I. Dunaev that the ancient core of the city was Gorodishche. However, V. P. Shilnikovskaya argues that the core of the city is the Cathedral Square with the Assumption Cathedral. She refers to archaeological excavations in Gorodishche from 1959-1960, which showed that the oldest finds date back to the early 15th century, disproving the theory of Ustyug's origin from Gorodishche. The wooden church of the Protection of the Most Holy Theotokos was listed as a cathedral with three domes and two chapels in the 1630 Census Book. The church burned down in the fire of 1698.

The stone church was built later, from 1884 to 1888, but it no longer exists. It was laid in 1884 and consecrated on October 23, 1888. The iconostasis in the church was created by Ustyug resident Andrey Arkhipov. Large sums were donated for the construction by Feofilakt, Zosima, and Dmitry Poldnev. The church housed the image of the Uncreated Savior and other relics, including an ancient copper baptismal bowl and a military banner. Previously, this building was part of a single complex with the church of Varlaam of Khutyn.

The votive church in the name of St. Varlaam of Khutyn was built in 1613 and burned down in 1698. The stone church was built from 1698 to 1704 and included a cold church in the name of Varlaam of Khutyn and a warm chapel in the name of the Miracle of Archangel Michael. The church housed various icons, including the image of St. Varlaam of Khutyn and St. Nicholas.

The Church in the name of the Most Merciful Savior was built over the Spassky and Gorodishche gates in the second half of the 17th century. It was dedicated to the icon 'Not Made by Hands,' painted in 1445, although a more accurate year is considered to be 1447. The church burned down in the fire of 1698 and was never restored.