The Castle at the Center of the Labyrinth is the home to the Goblin King, Jareth. Located in Goblin City, the castle stands over all the surrounding lands, and can be seen from all over the Labyrinth. Though he typically does so through the use of the crystals, Jareth is seen on occasion sitting on a window ledge, or standing out on a balcony, looking out over his subjects.
In the film, Sarah must make her way through the Labyrinth to get to this castle at the center. Jareth captured her brother, Toby, and brought him to his castle with the intentions of raising the child as his own. Treated as an heir to the throne, Toby is cared for here by Jareth and the goblins.
Various sections of the castle include the throne room, where the Goblin King spends much of his time, normally surrounded by his goblin subjects and an illusionary maze.