The chapel stands at the E of the inner bailey of the castle, and has a circular nave still standing. Its rectangular Norman nave had a polygonal apse, excavated by St John Hope (1903-07). This was replace in the 16thc by a longer chancel that bailey wall and was still standing in 1684 when it was drawn by Thomas Dinely. At that date it was called Prince Arthur's Chapel. The roof is gone but the walls stand to their full height, complete with later crenellations. The Romanesque work consists of an elaborately carved W doorway and a chancel arch, and the interior is decorated all round with blind arcading. Original windows, unmoulded on the exterior, survive on the N, S, and W walls. A billet stringcourse encircles the nave at window sill level.

From 1066 the manor of Stanton, in which Ludlow Castle, was situated, was held by the Walter de Lacy as tenant of Roger Montgomery. Although some of the fabric dates from the late 11thc., there is no written reference to the castle before 1138. The castle was held by the de Lacys until the death of Walter de Lacy II in 1241, when his lands were divided between his two surviving heirs; his granddaughters Margery and Maud. Ludlow Castle passed to Maud, and through her to her second husband Geoffrey de Geneville. They had a son, Peter and he had a daughter, Joanna, but Peter died before Geoffrey so that on his death in 1314 the estate passed to Joanna and her husband, the infamous Roger Mortimer. The castle remained in the Mortimer family until the death of Edmund Mortimer in 1425, when it passed to his sister Anne, married to Richard, earl of Cambridge, and thence to their son Richard Duke of York, ending up in royal hands when his son Edward came to the throne as Edward IV. It came to the Earls of Powis, the present owners, in 1811 when Edward Clive, the second earl, bought it from the Crown. The chapel was dedicated to St Mary Magdalene

Newman (2006) summarises the chapel's place in the history of the round church. The plan was used at Cambridge and Northamption in imitation of the Holy Sepulchre, and was associated with the Knights Templar and Hospitaller. Whether it is reasonable to conclude from this that the builder was Gilbert de Lacy, who regained the castle in 1150, surrendered his lands to his son in 1158, and went to Jerusalem to join the Knights Templar, as suggested in Newman (2006) is another matter.

Although the sculpture of the chapel is more developed than that in the gateway passage of the castle, many of the same features recur - a wall arcade carried on en-delit shafts, capitals without imposts, and scallop capitals with similar decoration on the shields. What is new in the chapel is the arch decoration; there is no chevron in the gateway passage. It should also be pointed out that most of the sculptural ornament is either chip-carving (perhaps the most spectacular feature of the chapel sculpture) or billet moulding, and that both of these appear in England from the late-11thc and rarely after the 1120s.

What this might imply is that the same workshop was active in the gateway and, at a slightly later period, in the chapel. Putting absolute dates on this is difficult since there is no foundation date for either building. The castle is referred to in 1138, but this is in the account of a siege, so it must at least have been defensible by that date. It is usually assumed that work began under Walter de Lacy in the mid-1070s - see Renn (1987), Coplestone-Crow (2000) - but if that is so, the sculpture in the gatehouse passage could not date from the start of the campaign. The present author would not want to place it earlier than 1100, and the chapel would fit into the period around 1110-20.