Alaçatı became an Ottoman town in the 14th century, according to some; in the 15th century, according to others. Regardless of the date, it is a well known fact that Alaçatı was a Greek settlement area. The Moslem population was 132 out of a population of 13,845 in 1895. After the defeat of the Ottomans in the Balkans, Moslem refugees fled to the western coast of Anatolia. The Greek population of Alaçatı was forced to leave in 1914 and the village was empted. Most of the Greek returned in 1919 during Greek administration of Smyrna (1919-1922) when the Hellenic Army occupied the region of Izmir. The majority fled hastily with the retreating Greek Army following Greece's defeat in the Greco-Turkish War, whilst others fled from the shores of Smyrna. The unilateral emigration of the Greek population, already at an advanced stage, was transformed into a population exchange backed by international legal guarantees.
Under the Treaty of Lausanne in 1923 and according to the implementation of the compulsory exchange of populations, Muslims who lived in Crete, Thrace, Macedonia and Dodecanese settled in Alatsata city in the houses abandoned by the Greeks. Most of these houses still remain in Alaçatı as an attraction for people to see and absorb the feeling of life in the past
