Kastelli is built at an altitude of 340 metres in the hinterland of the southern department of Heraklion, situated 14 km from the northern beaches of Crete. To the East of Kastelli there are the mountain ranges of Dikti and to the southeast there extends a great plain, from which the whole of Pediada (meaning plain) Province takes its name.The town of Kastelli is the capital of the Province of Pediada, with 25 traditional villages and 6819 residents. The fortress from which Kastelli takes its name was on the top of a small hill where the high school lies today. At the foot of the hill the plain stretches out, and it is from this fertile plain that the whole province, Pediada, takes its name.

The low hill on which contemporary Kastelli is found was first inhabited in the Neolithic period, as shown by the excavations of XIII Ephorate of Prehistoric and Classical Antiquities under the direction of George Rethimiotakis. The most ancient residents of Kastelli appear to have been settled around the current square of Meidani. This settlement was destroyed by fire at the end of the Mid-Minoan /Old-Palatial period, around 1700 B.C.

With the beginning of the New-Palatial years, the settlement was transported to the Eastern region of what we now call Kastelli. Part of this settlement has been located in the Kabitaki area, in a place known as Petras (Stone). This settlement had been developed around a central two-storied building of monumental dimensions, the architectural relic of which is also visible today in the square of Agios Georgios (Saint George.) and was used until the years of 1500-1460 B.C.,  having been later destroyed.

At the period between 1460-1050 B.C. the settlement appears to have been under the influence of Knossos, and new modern residences were built, some of which have been excavated in the plot of the parish of Kastelli. The ruins of the central building were maintained up to the Hellenistic years.

The Hellenistic settlement of Kastelli, for which we don't have much information, appears to have been destroyed around 220 B.C. This may have occurred following the raid of Knossos, which destroyed neighbouring Lyttos completely during the same period.

The region smoothly entered the Byzantine era, a period which was marked by the iconoclasm controversy and during which its residents suffered greatly alongside the whole Cretan population, being ikonodules, or iconophiles.

During the period of Saracen domination (824 or 828 until 961) Kastelli, along with the wider region of the current Municipality, was tried by the fury and the cruelty of Saracens.

The Castle, from which Kastelli takes its name, was renovated by the Venetians and was initially the seat of the Kastellanos (governor) of the region. The Cretan revolutions caused, it seems, the retirement of the Kastellanos from the fortress of Pediada, as it did not have any significant military importance, being located in the middle of the province. Thus the Castle of Pediada became the storage space for products from the Plateau of Lasithi (mainly cereals) that were destined for the capital, Candia, now Heraklion.

The Kastrofilakas (the guardian of the fortress) reports it in 1583 with the name Pediada Proprio, with 543 residents.  In 1625 Captain V. Kontorani asked from the central administration of Venice 500 Venetian ducats aiming to manufacture two storage buildings that had collapsed. The documents of the Ducal File of Hantakas often refer to it as Castro Pediade and in the Turkish census of 1671 the region is reported as Nefs Pediye with 150 haratsi (head tax).

In Kastelli in the period of the Ottoman domination, Turks were installed in the area due to the high fertility of its soil. After the revolution of 1821, the majority of the Turks abandoned the countryside, and it is reported that only 15 Turkish families have remained after that date.

With the coming of the Egyptians, Kastelli becomes their headquarters and constitutes the centre of the Ottoman campaigns against Cretan revolutionaries. In the time of the great Greek revolution, Hasan Pasha, with Kastelli as the centre of his operations, planned the capture of the Lasithi Plateau. Three times he tried to climb it from north-west; that is to say from the region of Malia and Kastamonitsa village (Tsouli Mnima). After one month, on 25th January 1823, he managed to reach the Plateau from the side of Katharo village after having made a circling movement from the south, at Viannos and Ierapetra.

After the desolation of Lasithi, the revolution began to be crushed and Hasan returned to Kastelli with a view to destroying the revolution in Mesara. He did not succeed in carrying out his plans however, because he was killed by his horse which reared up and threw him. The historian Kristodoulidis tells us that he was punished for the crimes which were committed at the expense of innocents. It was during this period that the Fortress of Kastelli was destroyed by the rebels, or from the Turks themselves, during the military enterprises of the Great Greek Revolution. In 1845 Raulin describes Kastelli as just a pile of ruins. 

In the Egyptian census of 1834, the settlement, called "Kasteli", has a population of 18 Christian and 15 Turkish families.

During the revolution of 1866-1869, the head of the Turkish army was Omer, the so-called "Attila of Crete". He reached Kastelli on 20 May 1867 with a view to occupying the Lasithi Plateau, as this was a den and a place of rebel supply. The rebels occupied the known passages (Krasi, and Tsouli Mnima) causing huge losses to the troops of Omer. The ascent to the Plateau of Lasithi for the Turks had become unattainable and, as often happens in such cases, the solution was given with external intervention. It is said that the same has happened in this case. A traitor from Kastelli, named Dimitris Galyfis offered help to the Turks in their effort to go up to Lasithi. He indicated to them the passage from Gerakiani Lagkada. The Turks climbed easily to Lasithi and burned everything, after a fierce ten day fight with the rebels.

It is during that period that Antonios Trifitsos, a great fighter from Kastelli, was distinguished in the fight against the Turks. Antonios Trifitsos, or Trichopoulos, took part in many battles over many years, becoming a general for the province of Pediada during the revolution of 1896-1898.  

This last Revolution began with the slaughter of Anopoli villagers (in the Province of Pediada) on 26^th July 1896. Trifitsos undertook the protection of the area and organised the defence of Pediada, having his headquarters in the Abbey of Agkarathos. In the autumn of 1896, he managed to dislocate the Turks in Houmeri and to restore communications in the provinces of Pediada and Monofatsi. He gave his last battle in Episkopi of Pediada, where he was wounded and died while being transported to Agkaratho, on the 25th of June 1897. He is buried at the northern side of Saint Antonios' church in Kastelli

In 1900, Kastelli has 777 residents, while in 1920 it is the seat of the homonymous rural municipality, with 831 residents. Around 1920, the high school of Kastelli was founded and is until today the intellectual lighthouse of the region. In 1928, Kastelli has 930 residents while in 1940 it has 1092 residents.

During German occupation there was in Kastelli a German camp. From there, the Germans undertook raids of the surrounding villages for supplies of foods and also for collection of firewood. A lot of big old oak trees in the region around the camp were cut down under German rule. They were using people from the surrounding villages for their work. On many occasions, the Germans were brutal to the people of the area that were used for their labour, without showing either respect or pity to anyone, not even to the women and the elderly. The Gestapo (German police) was the fear and the terror of the region. The chairmen of the villages were put to compile lists of men or women that would have to work on their behalf.

The Germans founded the airport at Kastelli with the labour of the residents of the surrounding villages. Many times the airport of Kastelli has been raided from the allied planes and many times it was sabotaged by the rebels. The damage was of course paid for later by the unarmed civilians of the region. After the departure of the Germans, the airport went to the possession of the Greek military. In the 1970s, the airport of Kastelli was used by civil aviation (Olympic Airways) while certain repairs were carried out to the airport of Heraklion,  

Once the Germans left the island, the population of Kastelli has grown for a little but without any lasting effects. In 1951 there are 1380 residents, in 1961 there are 1351 and in 1971, 1152 residents, in 1981 there are 1271 residents, in 1991 1318, and in the last census of 2001, Kastelli had 1692 residents.