The last and most ambitious of Elgar's dramatic cantatas, Caractacus was written to fulfill a commission negotiated by Henry Embleton for the Leeds Festival Committee. With a libretto by H.A. Acworth, a retired neighbor who had published several translations of Indian ballads in verse, and who had collaborated with Elgar on Scenes from the Saga of King Olaf two years before, Caractacus relates the story of a British chieftain who fought against the invading Roman legions in the Malvern Hills area of Britain. After a devastating defeat at the hands of the Roman armies, Caractacus was taken to Rome for trial, but instead so impressed the Emperor that he was pardoned and allowed to live out his life in Rome with his family. Aware of Elgar's deep love of the Malvern area, the composer's mother suggested to him the idea of composing a work set in the hills while he was visiting her on holiday at a cottage near Herefordshire Beacon, a hill, topped with massive earthworks, that had come to be identified with the Caractacus story. Elgar's original proposal to the Leeds Committee was for an orchestral work presenting several "mottoes" from British history, including Caractacus. This proposal, however, was rejected by the committee, which strongly favored a choral work. Thus, Elgar set his attention to realizing the Caractacus story in the cantata medium. Although based on the works of classical authors such as Tacitus and Dio Cassius, Acworth's libretto is entirely his own. He took several liberties with the historical story by reducing the number of Caractacus's children to one—a single daughter named Eigen, whom Acworth named after a Malvern neighbor. Acworth also introduces for her a love interest, the character of Orbin. Elgar arranged Acworth's libretto into a cantata in six scenes, which he scored for soprano, tenor, baritone, and two bass soloists, with chorus and orchestra. Taking approximately 100 minutes to perform, Caractacus received its premiere performance at the Leeds Festival on October 5, 1898, under the direction of the composer.

The work was begun shortly after Queen Victoria's diamond jubilee, and Elgar was able to secure permission, through Sir Walter Parratt, to dedicate the work in Queen Victoria's honor. Although there are elements of the work, including the triumphal march from the final scene, which are clearly patriotic in nature, the work is generally dominated by a pastoral mood. During the composition of Caractacus, Elgar often retreated to Birchwood Lodge, in full sight of Herefordshire Beacon, to relax. A sense of tranquility and stoic grandeur permeates the work.

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