The city of Chania is built over the ruins of the ancient prehistoric town of Kydonia. According to Cretan mythology, the city was founded by Kydonas, the son of Hermes or of Apollo (according to a different theory) and of the nymph Akakalida, daughter of king Minos.

Since its early years, the settlement developed to an important commercial center. In 1450 B.C, the settlement of Kasteli was destroyed by a big fire. After the 1450 B.C destruction, the city was rebuilt and flourished until the end of the Minoan period.

The city of Kydonia continued to flourish during the 1st Byzantine period, until the Arabic occupation. Christianity started to spread in the island during the 1st century.

During the 4th Crusade and after the fall of Constantinople in 1204, Crete was assigned to Boniface of Montferrat, who then sold the island to the Venetians. The Venetians settlers then constructed the wall of Kasteli and organized the new urban plan of the city within the walls, according to Venetian standards. A new modern city was then constructed within the city walls and significant private and public buildings were built.

In the mid-19th century, the city of Chania is declared the capital of the island, because of the frequent revolutions in the region of western Crete. This fact greatly influenced the development of the city, mainly with the predominance of more tolerant policy, along with an economic flourishment. New public and private buildings were constructed, following the modern neoclassic styles of architecture, and the city gradually acquired a European character and was extended outside the city walls.