The island of Ithaki was named after Ithakis, the son of Pterelaos from Kefalonia. Ithaki settled on the island of Ithaki, along with his brothers, Niritos and Polyktor, and built the fountain of Krini, which provides the entire island with water. Many historians claim that the palace of Ulysses once stood in Ithaki. According to legend, Arkissios, son of Kefalonia's king Kefalos, married Halcomedusa and had a son, Laertis. Laertis married Andiklia and had a son Ulysses. Homer in The Iliada praises Ulysses's heroism and inventiveness, while The Odyssey describes Ulysses's adventurous trip from Troy back to his home and family in Ithaki. Ulysses symbolises a man with endurance, strength, courage, bravery and extreme cleverness which helps him overcome all difficulties. Ulysses's trip back to Ithaki symbolises the adventurous course of humans, towards the fulfillment of their hopes and dreams.

The archaeological findings indicate that the island of Ithaki was originally inhabited in the Early Bronze Era. During the height of Mucenian civilization, Ithaki became the capital of the four towns of Kefalonia and the neibouring islands. This is the period in which the settlement situated near the village of Stavros was dated, in the area Pilikata, where many students claim Ulysses's palace stood. In the cave of Loizos, excavations cast light upon findings used for worship in the 9th century BC and offerings to the nymphs and other gods. During these historical years, the island was inhabited by the Dorians, which the existence of the two towns Ithaki and Alalkomeni can attest to. In the 2nd century BC, the island was conquered by the Roman army and became a province of the Roman state, while, in the Byzantine era, Ithaki was part of the province of Epirus under the command of East Illyrian. In 800 AD, Ithaki became part of the "Scheme of Kefalonia", where it was constantly attacked by pirates. The island was occupied by the Normands in 1185 and by the Franks in 1204, remaining under the command of the Orsini family until 1264. Ithaki, in contemporary historical sources, was referred to as "Val de Compare" (: The Best Man's Valley), or as "Little Kefalonia". After a short period of Turkish occupation (1479-1499), the Venetian Rule began in 1500. In 1797, the French occupied the island and their rule became official in the treaty of Kamboformio, on 17 October 1797. On 21 March 1800, in Constantinople, the independent "Ionian State" was founded under the sultan's supervision. In 1807, the treaty of Tilsit gave the Ionian Islands back to the French. On 26 September 1809, the English fleet arrived on the island and conquered it, after defeating the French army. The island of Ithaki remained under the English occupation, until 21 May 1864, when it was incorporated into the Greek State. The people of Ithaki fought hard during the Greek Revolution to abolish the Turkish Occupation. The island's most prominent fighter was Odysseas Androutsos.