In ancient times the island was known as Psyra or Psyria. Actually, Homer mentions in the Odyssey. Archaeological findings show that Psara have been inhabited since the fifth millennium BC.

Yet, the most important chapter in the history of Psara was not written until 1821. Psara was one of the first islands to revolt against the Ottoman Empire, raising the banner of revolution in 1821. At that time, the island prospered thanks to its fleet, which was the third power in Greece after Hydra and Spetses.

The Ottoman Empire was determined to suppress the revolution, so it sent large army and navy to occupy the island. On June 21, 1824 the Turkish forces landed on the island after a fierce resistance of the defenders. Historical sources suggest that the rudders of Psara ships were removed from islanders themselves in order to strengthen their zeal for resistance in the land. If this actually happened, it certainly was a major strategic mistake. After the Turkish forces landed on Psara, one-to-one battles followed throughout the island. Last of resistance defenders Psara Palaiokastro, the bastion above the city. There, a few hundred residents of the island resist strongly and when their defense is broken and they realize that all hope is gone,Antonis Vratsanos fires and blows up the powder keg storage of the fortress.

The occupation of Psara followed an appalling slaughter. The inhabitants that did not die on the spot were sold as slaves. Few managed to save themselves and settle in Monemvasia and later in todays Eretria, who was then named new Psara. Psara remained under Turkish occupation although many residents returned to them, especially at the end of 19th century. In 1912 the Greek destroyer "Ierax" commanded by captain Vratsanos, descendant of Antonis Vratsanos who had blown Palaiokastro, sets Psara free and it is finally permanently incorporated to Greece.