An artist's impression of one of the splendid rooms. © Historic Scotland

The Royal Palace at Stirling Castle, splendid seat of the Stewart dynasty, is to be returned to its Renaissance magnificence in a £12m project, confirmed by Historic Scotland on June 10 2008.

Built by James V in 1538, the palace served as a sumptuous residence for the Stewart king and his queen, Mary de Guise (whom he married 460 years ago this week), its grand facades contrasting with the castle walls.

However, by the 17th century, the palace had fallen into disrepair and was deemed unfit for royal tenants. Now, the royal lodgings are to be brought back to the fantastic shape they were in originally, furnished and decorated in mid-16th century style.

The project will allow visitors to see what luxurious halls and chambers in which the kings and queens of the 1500s resided, while costumed interpreters dressed in authentic rich garments from the era show them round.

Scotland's 'other crown jewels', the Stirling Heads, will also go on permanent display. The Heads are intriguing hand-carved oak medallions, up to a metre in diameter, that once adorned the ceilings of the palace. They depict monarchs, courtiers, imps and other mythological creatures, and delight all who see them.

One of the Stirling Heads. © Historic Scotland

"The conservation and presentation of James V's magnificent Renaissance palace is the most ambitious phase of Historic Scotland's project at Stirling Castle," said Chris Watkins, head of Historic Scotland's project at the castle.

"It will mark the culmination of many years of research and skilled conservation and craft work that have helped reinstate the splendour that the Stewart monarchs gave to Stirling."

"We have so far completed the refurbishment of the Great Hall and the Chapel Royal and this phase will help emphasis the grandeur of the palace, the royal lodgings and James V's aspiration to create a Scottish court of European importance."

Fittingly, as he had just renewed Scotland's 'Auld Alliance' with France in 1537, it is thought James V had the palace designed by a French master mason in his employment – either Mogin Martin, Nicholas Roy, or perhaps John Roytell. His principal master of work, Hamilton of Finnart, was probably closely involved, too.

The design reflects contemporary ideas on the architectural expression of royal authority, and the increasingly sophisticated protocol of courtly life. It is Britain's most complete surviving Renaissance palace, strongly influenced by other European buildings of the time, and indicates James' aspiration to present himself as a great Renaissance king.

© Historic Scotland

The palace has recently undergone a major programme of archaeological research, and visitors can currently see the historic fabric behind the stripped-back ground floor, with its great fireplaces. Visitors can also see weavers at work handcrafting new tapestries based on ones that would have hung there in the 1500s (the Hunt of the Unicorn series).

The project also includes plans for a Renaissance Gallery (displaying the Stirling Heads) and an updated exhibition in the palace vaults on the lives of courtiers, jesters and musicians.

Historic Scotland is investing £9m in the project, with an additional £3m granted by the Scottish Government. The Palace will be closed to visitors in August 2008 and is expected to be completed in 2011.