Silent film star Colleen Moore was always fascinated by dolls and doll houses. She owned several elaborate doll houses as a child, but later in life her father, Charles Morrison, suggested that she should pursue her passion for miniatures and doll houses by creating the "doll house" of her dreams. Her position as one of the most popular actresses in Hollywood gave her the resources to produce a miniature home of fantastic proportion.

By 1935, approximately 100 people worked on the Fairy Castle. The price tag for this 8'7" x 8'2" x 7'7" foot palace, containing more than 1,500 miniatures, was nearly $500,000.