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Modern Fethiye is located on the site of the ancient city of Telmessos, the ruins of which can be seen in the city, e.g. the Hellenistic theatre by the main quay.
A Lycian legend explains the source of the name Telmessos as follows. The god Apollo falls in love with the youngest daughter of the King of Phoenicia, Agenor. He disguises himself as a small dog and thus gains the love of the shy, withdrawn daughter. After he reappears as a handsome man, they have a son, whom they name ‘Telmessos’ (the land of lights). The city became part of the Persian Empire after the invasion of the Persian general Harpagos in 547 BC, along with other Lycian and Carian cities. Telmessos then joined the Attic-Delos Union established in mid-5th century BC. and, although it later left the union and became an independent city, continued its relations with the union until the 4th century BC.
Very little is known of the city during Byzantine times. Surviving buildings attest to considerable prosperity during late Antiquity, but most were abandoned in the 7th–8th centuries due to the Arab-Byzantine Wars. The city was fortified in the 8th century, and appears as “Telmissos or Anastasioupolis” ca. 800. By the 10th century, the ancient name was forgotten and it became known as Makre or Makri (Μάκρη, “long one”), from the name of the island at the entrance to the harbour. In the 12th–13th centuries there are signs of renewed prosperity: the city walls were enlarged, a report from 1106 names Makre a centre for perfume production, and geographical works from the 13th century describe the city as a commercial centre. The area fell to the Turks in the late 12th or early 13th century.
Telmessos was ruled by the Anatolian beylik of Menteşe starting in 1284, under the name Beskaza. It became part of the Ottoman Empire in 1424.
The town grew considerably in the 19th century, and had a large Greek population at this time.Following the population exchange between Greece and Turkey, the Greeks of Makri were sent to Greece where they founded the town of Nea Makri (New Makri) in Greece. The town was resettled with Turks from Greece. At nearby Kayaköy, formerly Levissi, the abandoned Greek Orthodox church is still standing.
In 1934, the city was renamed ‘Fethiye’ in honor of Yüzbaşı Fethi Bey (de) one of the first pilots of the Ottoman Air Force, killed in 1914 by Al-Samra.
Fethiye has experienced many earthquakes. Last significant ones date to 1957 and 1961, with 67 casualties and 3200 damaged buildings after the 25.04.1957 earthquake. The town has been rebuilt since then and now has a modern harbor and a marina.
On August 3, 1953, Air France Flight 152, while en route from Rome to Beirut, ditched into the Gulf of Fethiye off Kızılada. Of the 8 crew and 34 passengers on board, four drowned. The survivors were hosted by the residents during their stay in the town.