Panormo is situated in a historic place and is believed to be on the site of the ancient city Panormus. The existence of an ancient city is confirmed by the discovery of the imposing basilica of St. Sophia (around 6th AD Century) 500m southwest of the village. The basilica is considered as one of the greatest Christian churches in Greece and the largest in West Crete. Moreover, Panormos is called Kastelli of Milopotamos (i.e. Castle of Milopotamos), because it was fortified by the Genoese, who conquered it in 1206. The fort, however, fell a few years later at the hands of Venetians. Traces of the fort of Milopotamos are still visible next to the harbor.
In the modern history, Panormo was a center for the transportation of goods produced in the wider region. The area produced large quantities of olive and carobs. You can still visit the renovated old carobmill, which is nowadays used as a cultural center. During the German Occupation, Panormos was bombed. The new national road that was constructed in 1970s running next to the village and the construction of the marina in 1980 contributed to the touristic development of Panormos.
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