The village of Castleside was once part of the parish of Healeyfield, but it became a parish in its own right in 1873. The name Castleside is a recent one though to have come from the name of a local farmer called Castle. In 1806 after a visit by John Wesley in 1772 Watergate Chapel was built. The Church of England was opened in 1867. Healeyfield is the oldest township within the parish of Castleside now designated as an area of outstanding beauty. Records mentioning Healeyfield exist from 1170.

The earliest remains in the area date to the prehistoric period. An early burial probably stood at the now lost site known as theThe Sneep, and prehistoric tool making also took place in the parish.

Although there was once a Roman fort at nearby Lanchester, few discoveries of this period have been made, beyond an isolated stone altar. There is also a possible dam which may have been related to the water supply to the fort.

There is little archaeological evidence for settlement in this area during the Anglo-Saxon period, but the evidence from placenames shows that people did live in the area. For example, the name Healeyfield itself translating to 'field by a high clearing' in Old English. By the medieval period there was more extensive settlement in Castleside. The remains of a small chapel were still visible until the mid-19th century.

Castleside remained mainly a farming area, and remains of many farmhouses can still be seen, such as that at Fell Close. However, by the 19th century the lead industry began to develop. Although most of the remains of this industry have now disappeared, all that survives of the flues at Healefield smelt mill are still visible.