The need for processing of wood in the forests of the border zone was the reason, why the Prince Schwarzenberg approved in 1799 building of houses to 48 families of wood-cutters at the place then called Schöne Ebene – Pěkná vyhlídka. The new village was built in 1800-1801 and got German name Fürstenhut, which occurred in its Czech version, i.e. Knížecí Pláně, in 1877.
An ancient folk legend describes the origins of the local name differently. It says that in times of the village foundation, the Prince Schwarzenberg himself visited the place. Strong wind nevertheless carried away his hat that remained hanging on one of the tall fir trees. One of the wood-cutters climbed the tree, took the hat down and handed it over to the Prince saying: "Here is your hat!". The Prince thanked the wood-cutter and suggested to call the new village in memory of this event the Prince's Hat - Fürstenhut in German.
The oldest written record of the number of houses and inhabitants of the village comes from 1840, when the village already had 59 houses with 521 people. In the same year there also was a forester's lodge, a gamekeeper's house, a mill, a saw-mill, a pub and a border guard station. In 1861, the foundation stone of a new church was laid here and the completed church was consecrated on 27th January 1864, with general public attending on the occasion. An independent vicarage was established in Knížecí Pláně in 1865, when the village had 60 houses with 725 inhabitants. The number of houses gradually grew in the following years, while the population tended to decrease.
In 1850, the village was included under administration of Kunžvart (today Strážný) and its independent municipal office was not established here but in 11902. The post office was opened in 1913. In 1930 the village had 458 people, in majority of German nationality (except for eight Czechs). After the World War II the vast majority of local people escaped to Germany, which is why only 58 people left the place within the scope of the later official displacement. In 1957, 53 people were still living here, but the establishment of the border zone caused definitive extinction of the village. The church was demolished in 1956. None of the original houses of Knížecí Pláně have remained to date. Only the gamekeeper's house was standing in the place of Knížecí Pláně-Hájenka.