During the Middle Ages this area was called "Vale di Compare" (Port of the Godfather). Today the official name is Ithaca, but everyone refers to the capital as Vathy or Chora.

The town has been built along the coastline of one of the most natural ports of Hellas. The length of the port is 926 m. with an entrance of 300 m. in width. Extending from the coastline the town meets a small valley full of citrus trees, vineyards, olive trees, and agricultural farming.

During the ancient times there was a temple for the god "Forkyn" in the bay of Vathy, and also it has been recorded that after Ulysses' "Odyssey" he secretly landed on the sea-shore "Dexa", which is locate beside the entrance of the port of Vathy.

Prior to the Middle Ages there was no organized inhabitation in Vathy. During the Middle Ages what settlement existed was forced to move up the mountain to live safely away from the port, which was then being used by pirates as a hideaway.

During the Venetian occupation some families who were living in the settlement of Paleochora on the mountain, moved back down to Vathy, and it was then that the first houses were built beside the "Metropolis" (cathedral). The population increased during the Venetian and English periods reaching a total of 5,000 residents. Vathy became the most important center trade and commerce, political activities, law and order.

In the middle of the port lies the islet named "Lazareto" on which stands the church of "Sotiros" (Savior) built in 1668. In 1836, with some of the stones being used from ancient ruins, another building was constructed which functioned as a quarantine all through the English period. With the English leaving and Ithaca uniting with Greece, in 1864 the building became a prison until 1912.

During the following decades there was no official use for this building and it was not built again after being demolished by earthquakes in 1953.

At the entrance of the port, on both sides, still remains a fort that was built by the French in 1807 in order to confront the English. Passing through the entrance on the left side is the seashore "Loutsa". Here the famous dockyard operated all through the 19th century, constructing over 200 ships.

With the wealth invested by the ship owners, merchants, and sailors, in the 1st decade of the 20th century, prosperity came to the island allowing the construction of many private and public buildings. But in the second decade the Ithacan fleet began to decrease causing a decline in the economic situation of the majority of the people.

The earthquakes of 1953 demolished almost all of the buildings in Vathy, leaving only a few standing. Among the buildings destroyed were Venetian public buildings and houses which fortunately were rebuilt in the same manner. Vathy is considered a traditional inhabitation by a recent law passed in 1978 which prohibits construction or repairs in any other style of architecture or color. For accommodations in Vathy, there are several hotels and hundreds of rooms to let.

For the different tastes in entertainment there is a variety of taverns, confectionery and coffee houses, and discotheques.

For swimming and tanning are the beaches inside or just out of the bay, which can be reached by foot, car or boat. To visit other areas on the island, buses leave Vathy several times a day, Organized excursions of the island are offered by tour buses and boats. Motor bike and boat rentals are also available for transportation.

There is a yachting service station for refueling, fresh water and supplies, service stations for cars and motor bikes,and a petrol station. Vathy, as the main port of Ithaca, is connected by ferry boat daily to Patras, Cefallonia, Astakos periodically to Corfu and Italy.

There are many interesting sites in Vathy such as the houses of G. Karavias and G. Drakoulis, which survived the earthquakes, also the churches of Agios Georgios, the Cathedral, and the church of Taxiarchis with the icon of Christ, which is believed to be painted by El Greco. Another place to visit is the museum, which shelters important discoveries of Mycenaean and Corinthian periods found during series of excavations which took place in south Ithaca and the Aetos area.

Nowadays, Vathy as a municipality operates all public services such as judicial and administrative, international communication, also it has primary and high schools, athletic stadium, medical center, cult center, theater, library, and branches of the National Commercial, and Agricultural Banks of Greece.

Since 1975, every summer, the municipality organizes cultural festivals with theatrical plays, concerts, debates and art exhibits of which artists and people from all over Hellas take part. Also since 1981 an International Odessa Congress takes place annually with the participation of scientists from all over the world who specialize in Homeric studies.