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Finno-Ugric Liv tribes inhabited the area as far back as 2000 BC; by the 12th century they had built several wooden hill-top strongholds. In 1207, when the German crusaders were dividing up their spoils, the Gauja was chosen as the boundary in this area between the territories of the Knights of the Sword, who took the land south of the river, and of the archbishop of Rīga, who took the north side. Both built prominent castles, as much to guard against each other, one suspects, as against any local uprising.

After suffering numerous wars, particularly between the 16th and 18th centuries, Sigulda developed as a country resort with the building of the Pskov-Rīga railway in 1889. The Russian owner of the local estate, Prince Kropotkin, sold off land to wealthy Rīgans to build their own country houses.