The Proto-Minoan settlement that is presently excavated in the city of Chania has the hill of Kasteli as its center. Large habitations with well-built rooms, elegant floors, decorated walls, door frames and ceramics are some of the findings that indicate the existence of a significant proto-Minoan center.  This settlement is the most important ancient settlement of west Crete. Its geographical position is ideal, not only because it is next to the sea, but also because it is surrounded by the rich valley of Chania. Thus, the location encompassed all the requirements for the development of agriculture, fishery and sea commerce. This fact was confirmed by the extended excavations that started in 1964 and continue until today. The hill was continuously inhabited from the proto-Minoan years until today, and that makes the excavation works and research difficult, as the excavation layers are numerous and thin, making the dating and correlation of the findings extremely difficult.

During the mid-Minoan period (1^st half of the second millennium B.C), the settlement develops into a dynamic center. It is the period when the first palaces are built in Crete. While the economy still depends on agriculture, at the same time commerce and navigation develop rapidly. Commerce centers are created outside the island and colonies are expanding. Such commercial relations connect Crete with the nearby island of Kythira. The similarities found on the ceramics of "Kasteli" in Crete and "Kastri" in Kythira is a characteristic example of these relations.

Unfortunately, the mid-Minoan construction phases of the settlement of Kateli have been destroyed by the extended construction activity in the following historical periods, and only a few remains have been found. The construction remains of the proto-Minoan and mid-Minoan periods have been located in different parts of the city of Chania (around the municipal market and further to the east) and indicate the organization of the ancient settlement, which had the hill of Kasteli in the old port as its center.