As early as the Early Bronze Age, Minoan settlements were in the middle of an advanced phase of urbanization, and can be regarded as towns. During this period, the Minoans chose to settle in fertile valleys and mountain slopes with plenty springs and in positions of geographic importance for foreign relations and trade. Settlement in this period appears more dense in central and eastern Crete and particularly in the regions where Minoan palaces were later built.

During the Middle Minoan II period (2000-1550 BC) the foundation of the palaces represented a new form of urban settlement which derives from the East and appeared for the first time in Europe. Minoan palaces dominated the middle of the plains - as the case of Knossos - and plateaux, such as Phaistos. The coastal palaces of Zakros and Mallia show the importance of such installations having access to the sea.

Alongside the palaces are smaller settlement blocks of a similar architectural structure, the so-called Minoan villas. But research has been so limited that it is still uncertain whether many settlements are palaces or villas. Villas are built on positions similar to those selected for palaces. Despite the fact that there was provision for special areas for religious ceremonies in both forms of settlement, sacred buildings have been found in isolated positions, such as mountain peaks and caves.

A series of mainly Late Minoan settlements built in fertile inland regions are characterized as farmsteads. The building at Vathypetro, in the greater Archanes region where houses, workshops and a tripartite shrine coexisted on a relatively small piece of land, is a typical farmstead.

Towards the end of the Late Minoan and during the Subminoan period there was a change in the preferences in settlement positions. The settlements were now built in areas of high altitude and very often in inaccessible, craggy positions, indicating the strong need for security as well as an enfeebled central power.