Derby House faces Parliament Square in the heart of old Castletown. Local tradition (recorded on tourism and hospitality sites) links the name to accommodation built on the site for the Lords of Mann, the Earls of Derby, in the 16th century. Manx historian William Henry Cooper's account of the building on this site describes a mid-19th century structure built by tobacco and spirits merchants Robert and John Duff, which later traded as a draper's shop run by Richard Watterson, then became a restaurant and boarding house under John Cannell, and served for a time as Castletown's Post Office before conversion to offices by 1999. The building has more recently been restored as a boutique hotel trading under the Derby House name.