This area was first inhabited during the early Bronze Age (late 4th millennium BC). The walled cities called Troy I to Troy V (3000–1700 BC) had cultures similar to that of the Bronze Age, but Troy VI (1700–1250 BC) took on a different, Mycenae-influenced character, doubling in size and trading prosperously with the region's Greek colonies. By the time of Troy VI, the city probably covered the entire plateau, making it one of the largest towns in the Aegean region. An earthquake brought down the city walls in 1350 BC, but these were rebuilt. There is evidence of widespread fire and slaughter around 1250 BC (Troy VII), which leads many historians to believe that this is when the Trojan War occurred. What is known of the economic and political history of the Aegean region in this period suggests that the real cause of the war was intense commercial rivalry between Troy and the mercantile Mycenaean kingdom, the prize being control of the Dardanelles and lucrative trade with the Black Sea.

The city was abandoned by the end of the 2nd millennium BC but was reoccupied by Greek settlers from Lemnos in the 8th century BC (Troy VIII, 700–85 BC). In 188 BC it was identified by the Romans as the Ilion of Homer and recognised as the mother city of Rome (Ilium Novum), and was granted exemption from taxes. The city prospered under Roman rule and survived a severe earthquake in the early 6th century. Abandoned once again in the 9th century, it was reoccupied in the later Byzantine period and not finally deserted until well into the Ottoman period.

The archaeological site was added to Unesco's World Heritage list in 1998. In the Unesco citation, the ruins are described as the most significant demonstration of the first contact between the civilisations of Anatolia and the Mediterranean world.