The origins of Castelmezzano date to approximately between the 6th and 5th centuries BC, when Greek settlers got into the valley of Basento and founded in Magna Graecia a town called Maudoro, meaning roughly the world of gold. In the 10th century AD, the Saracen invasions forced the local population to find a new location. It is said that during the exodus, a shepherd called Paolino discovered a place to move to, formed by rocks from the steep peaks of which one could repel the invaders by means of rolling stone boulders on to them.

After the occupation by the Lombards, the Normans settled there between the 11th and 13th century AD and built a castle (of which are still visible the remains of the walls and tier of rocks which allowed access to the higher lookout point). It was from the name of the castle (Castrum Medianum, roughly means Castle in the Middle) that the town derived its name, the castle so named because of its position between those of Pietrapertosa and Albano di Lucania. With the Normans, Castelmezzano experienced a period of peace and development, until under the Angevins it experienced a sharp decline.

With the arrival of the Aragonese, between the 14th and 16th century, many landowners received Castelmezzano as fief, although the economic and social conditions remained mostly unchanged. Only with the appointment of Baron Giovanni Antonio De Leonardis (whose family governed the town from 1580 to 1686), did development take place. Subsequently, it passed by marriage to the De Lerma, who held it until 1805, when feudalism was suppressed in southern Italy.

In the 19th century, Castelmezzano was affected by brigandage. Due to its location, rich in natural hiding places among the rocks and lush vegetation, it was an ideal refuge for many bandits. At the end of the century, the town suffered a major migratory exodus, which prompted many families to move overseas.