The extensive formal designed landscape laid out around the original house as indicated on the plan of c.1750 by General Roy was informalised in the 18th century. Further improvements were made in the late 19th century and after the construction of the new (third) house between 1900-04.
Documentary map evidence of the development of the designed landscape is provided by several design plans including a plan of 1748 by William Clark showing the layout of a formal garden on the banks of the River Tay to the east of Bishop's Hill. A plan of 1759 by Matthew Stobie and a plan of 1780 by J. Stobie are known to exist although their whereabouts are unknown. In addition, evidence is also provided by General Roy's map of c.1750, the 1st edition OS map of c.1861, and the 2nd edition OS map of c.1910.
The lands of Dunkeld originally belonged to the Church but were acquired by the Atholl Estate in the 17th century. The Dunkeld Estate was subsequently enlarged by the acquisition of land from surrounding crofters. The first Dunkeld House was built between 1676-84 to the design of Sir William Bruce. In 1703, the son of the 2nd Earl of Atholl was created Duke of Atholl. The 2nd Duke, James, succeeded in 1724 and he commissioned the layout of the formal landscape indicated on General Roy's plan of c.1750 and planted the first European larch in the policies.
The 2nd Duke's nephew and heir, John, took a keen interest in the policies and is said to have built The Hermitage for his uncle in 1753. On his succession to the title of 3rd Duke in 1764, he continued his improvements, including laying out the woodland walks on Craig a Barns Hill. Lady Charlotte's Cave is said to have been created as a birthday surprise for his wife and cousin, who was the daughter of the 2nd Duke and whom he had married in 1753.
The 4th Duke succeeded in 1774. Over the next 25 years, he was responsible for the remodelling of the walks and terraces, and extensive work carried out along the riverside. He became known as the 'Planter Duke' in view of the acres of woodland which he planted. He commissioned Thomas Hopper to design a new house, to be built in the parkland to the west of the original house during which time the family resided at Adamnan's cottage near the Cathedral. It was a large cottage ornee which has since been demolished. Work on this new house began in 1828 but ceased on the 4th Duke's death in 1830. In later years, the 7th Duke of Atholl noted that it was a gross error of judgement on the part of the 4th Duke to build a new house so close to Blair Castle in view of the considerably improved communications systems by that time.
The 6th Duke succeeded in 1846 and, again, improved the estate between then and his death in 1864. The 7th Duke was responsible for the construction of the present Dunkeld House between 1899-1901. The 19th century Dunkeld House had been demolished by the time of the 2nd edition OS map of c.1910, by which time new driveways had been formed to Dunkeld House from Pulney Lodge in the north and Dunkeld Lodge to the east. In the 1930s, the house was sold to the Lyall family. In 1943 the Duchess of Atholl, wife of the 8th Duke, donated Ossian's Hall, together with some land which now comprises The Hermitage, to the National Trust for Scotland.
The house has been managed as a hotel since World War II and has recently been acquired by Stakis plc with some 114 acres (46.2ha) of policy land. They plan to continue to run the house as a hotel.