Sougia was known as Syia in ancient times and was one of the harbours of the city of Elyros. The multitude of small, independent city-states is illustrated by the Confederation of Oreii, an accord formed around 300 BC between Elyros, Lissos, Irtakina, Tarra, Syia and Pikilassos, six towns in a now barely populated area of the Southwest. They were later joined in the Confederation by Gortys and Cyrenaica (in North Africa).
Meanwhile Roman power was growing in the Mediterranean, and
Crete's strategic position and turbulent reputation drew her
inexorably into the struggle. Syia flourished in the Roman Period
and the first Christian Years.
There are some ruins of Roman houses in the eastern part of the valley as well as the remains of an aqueduct.
After the early Byzantine period little is known about Sougia. It was probably no more than a fishing settlement for the villages up in the hills (Livadas, Koustogerako and Moni).
Sougia became a village again after W.W.II. At the time there was no road leading from the North of the island to the region and a regular boat connection from Piraeus was established in order to trade goods. These were then carried by mules to the inland villages. Soon there were five trade counters in Sougia and a number of families moved to the village. In the1950's Sougia had a school with 150 pupils attending. When the road linking Sougia to the North was built the village lost its significance as a trading post. The majority of the villagers went back to their original villages or emigrated (to the US, Canada, Australia and the Greek mainland) and Sougia once again became a tiny, sleepy settlement.
Sougia was "discovered" in the 60s by the first travellers and became quite popular in the 70s, especially with young Germans. At the time there were hardly any rooms for rent and only a couple of small tavernas, but the continuing popularity of the village (people kept coming back and were also telling their friends what a nice place it was) encouraged some landowners to build small hotels.