The ancient city of Demetrias, built on a strategic site on the Pagasitikos Gulf, was named after its founder Demetrios Poliorketes. In the early third century BC, this Macedonian king united a group of small villages around the classical city of Pagasai to create a new city that he intended as a powerful economical and political centre. The territory of ancient Demetrias, which covered almost the entire region of Magnesia, is rich in history from the Neolithic period to Late Antiquity.

The earliest finds in the area come from Pefkakia, a promontory to the northeast of Demetrias, where a settlement developed during the “Classical Dimini” phase of the Neolithic period and the “Rachmani” phase of the transitional period from the Neolithic to the Bronze Age. The settlement flourished in the Bronze Age and had contacts with the northeast Aegean, the Cyclades and the Greek mainland. This Mycenaean settlement at Pefkakia has been tentatively identified as the port of Iolkos. This may indeed be true, if we accept that myths reflect historical reality to some extent, as the area traditionally focuses on fishing, ship-building and other commercial activities.

The next cultural phase in the area of Demetrias dates to the Classical period. Very few remains of this period (some houses, a small pottery kiln and tombs) have been discovered in the north sector of the city. The Hellenistic city was founded in 293 BC as one of the three neuralgic cities of Greece, which also included Chalkis and Corinth. Demetrios and other kings of the Antigonides dynasty used Demetrias as a base for political and military operations in Thessaly and southern Greece. With the support of the Macedonian kings Demetrias developed into a large international port, attracting settlers form Greece, Illyria, Epirus and other regions of the Mediterranean and the Near East, whose names appear on the funerary stelai found in the area. The city flourished as a financial, commercial and political centre mainly between 217 BC and 168 BC, when, after the battle of Pydna, the Romans conquered the kingdom of Macedon.

In the first century BC, Demetrias lost its political power and began decreasing in size. Apart from the north sector, towards the seafront, and parts of the south, the city was largely abandoned. The city's importance diminished further in imperial times, even though Demetrias remained the capital of the Magnesian Alliance, which survived, as indicated by inscriptions and coins, until the end of the third century AD. In the late third-early fourth century AD, Emperor Diocletian abolished the Thessalian and Magnesian alliances, and made Thessaly a separate province with Larissa as its capital. Under Constantine the Great, Demetrias became an episcopal see. The city recovered briefly in the fourth and fifth centuries AD, but was permanently abandoned in the sixth century. In Byzantine times, a new city developed at a short distance to the north of Demetrias, on the site of modern Volos. Volos is now the capital of the nome of Magnesia.

Archaeological research, which began in the region of Demetrias at the end of the nineteenth century, revealed important monuments and precious information on the life and organization of the ancient city. A. Arvanitopoulos excavated a large part of the ramparts and their bastions with the famous inscribed stelai, as well as the cemeteries, shrines and parts of the palace and theatre. Excavations continued under D. Theocharis in the palace and the theatre in 1956-1961 and again in 1967-1981 under V. Milojcic and a team of German archaeologists. Since 1981, long-term and rescue excavations have been conducted by the Thirteenth Ephorate of Prehistoric and Classical Antiquities, along with the conservation and restoration of the monuments of the ancient city.