Kostroma local historians long believed that the kremlin existed at its current location during the period of the principality. However, archaeological studies showed that the city was originally located at the mouth of the Sula River upstream of the Volga. The wooden fortifications of the city often suffered from fires and attacks by Novgorod raiders. After its destruction in 1416, the kremlin was moved to a higher location. It is likely that at that time the city cathedral changed its name from Theodorov to Assumption.

The first stone structure of the kremlin and the entire city, the Assumption Cathedral, appeared at the beginning of Ivan the Terrible's reign. In the 17th century, due to the special reverence of the Romanovs for the Theodorov Icon of the Mother of God, the cathedral was expanded, and the Theodorov chapel was added. According to the kremlin's layout of 1678, it was surrounded by a wooden wall with many towers: Chudov, Tainichny, Naugolny, Vodny, Voznesensky, Bogoslovsky, Ilyinsky, Voskresensky, Spassky, and Prechistensky. Closer to the Volga was the Zdvizhensky Monastery with a tent-roofed church. Old descriptions also mention the Trinity Church and the Church of the Praise of the Mother of God.

The fire of 1773 destroyed the Zdvizhensky Monastery and the tented bell tower of the cathedral. The Assumption Cathedral was restored, and on the site of the monastery, a warm Epiphany Cathedral was built according to the design of S. A. Vorotilov in the style of late Baroque with an archbishop's burial vault. Construction in the kremlin continued until 1791. At that time, a new entrance in the form of the Triumphal Gates was arranged, and a 64-meter bell tower was erected, which became the architectural dominant of pre-revolutionary Kostroma. The fortifications of the Old and New towns were dismantled, and the moats were filled in during the 18th and 19th centuries. To this day, only the remnants of the eastern rampart of the Old Town and the slopes of the upper terrace have survived. In 1922, the kremlin churches were handed over to the Renovationists, closed in 1929, and demolished in 1934. A park was laid out on the site of the temple complex in the historical center of Kostroma, with a monument to V. I. Lenin at its center. It was placed on a pedestal prepared in 1913 for a monument in honor of the 300th anniversary of the Romanov dynasty. The monument still dominates this part of the city.

Currently, the territory of the former Kostroma kremlin is home to the Central Park of Culture and Recreation, a popular place for walks for residents and guests of the city. In 2016, the restoration of the destroyed cathedrals began, with completion of the work planned for the end of 2020.