After the Swedish Wars and the king's declaration of absolute monarchy in 1660, the castle lost its status as a royal residence. All of Nyborg was rechristened "Our Royal Fortress Nyborg", and was built up along the same lines as Fredericia (in Jutland) and the Citadel (Kastellet, near Copenhagen), following the principles of the most modern defenses with large, jutting bastions. Inside the ramparts, life in the town was changed, since Nyborg now had a garrison. At regular intervals, the town filled with new recruits, who didn't live in barracks but lodged with the townspeople.
The castle lost its military function and fell into disrepair. In the 1720's, most of it was torn down and the bricks were reused elsewhere; however, the palace and the central tower were spared. These two buildings were used as an arsenal and a powder magazine for the garrison. The old castle had been degraded to an armoury, the Arsenal.
Fire in Nyborg
In 1797, the worst fire in its history ravaged Nyborg. Many buildings were turned to ashes. Luckily, the Church of Our Lady, built during Margrethe I's reign, and the medieval vicarage, were not damaged. Likewise, the Brothers of the Cross buildings (1396) and the merchant house of Mads Lerche from 1601 were spared from the fire. From the ruins, a new Nyborg rose, with fine town houses in Greek Revival style and storefronts built in a new fashion, Nyborg-style, with a pediment and with roof cornices covered with winged tiles.
Nyborg's period as a fortress town ended in 1869, and almost all of the ramparts were torn down to make space for the town to grow. The town purchased the land where the ramparts had stood and sold them to townspeople. Part of the fortress was saved, the area that Frederik III had gotten engineer Henrik Rüse to design and build after the Swedish Wars, including the Country Gate (1666) and the Crown Prince's Bastion, the Queen's Bastion and the connecting rampart between the bastions, behind the castle.
Even though the fortress was decommissioned, the town continued to host the garrison. Traffic, both military and in the form of trade, has been Nyborg's greatest source of income throughout the centuries. The international trade privileges vanished with the state bankruptcy in 1813, but the town managed nonetheless, and for 100 years it continued as a romantic provincial town with its garrison as a special feature. Since the soldiers were billetted in private homes, almost all the homeowners in town had a bit of extra income from the military. In 1913, Nyborg lost its garrison and the soldiers that had been stationed there for hundreds of years, but managed also to overcome this loss and even to thrive. The State Prison was established as a kind of replacement for the garrison, traffic increased, and Nyborg was soon a railroad and ferry town.