Smithestone was built over 2,000 years ago, over the ruins Hornworth, the former castle and seat of House Smithe. It was built under the rule of King Orroman Harrigon, who usurped the Smithlands from the Smithes, with one of his vengeful acts being the destruction of Hornworth. For the next several centuries Smithestone was the capital of the Kingdom of the Forges.
After the Massacre at Hornworth, Ser Orromus Harrigon had the castle pulled down, and rebuilt a new castle over it, much bigger than his ancestor had built it. After it was rebuilt, he renamed it Smithestone, after having taken parts of the Smithe's sigil as well as both of King Marthew's daughters to wife. Orromus planned on bringing prosperity to his descendants, so he began the construction of a large forge beneath Smithestone.
It took four generations to complete the forges of Smithestone, completed by Lord Durran Harrigon over 100 years after Orromus' death. The forges are populated with hired blacksmiths, trained criminals and the bastard sons and daughters of countless Harrigons, working to provide weapons all across the Seven Kingdoms. The forges are said to span miles underground, and could act as a city itself if not for the fact is was all beneath the castle. It would take days for anyone to travel through, given all of the equipment and all the people who work there.
Smithestone was expanded upon after Aegon's conquest of Westeros. Being just as notable for their talent with steel as they are now, Aegon gave the house a large amount of Valyrian Steel, able to get the Harrigon's out of debt.