Thirasia was once part of a single volcanic island, the mythical Strongyli (or Kallisti), together with present-day Santorini. Around 1600 BC the cataclysmic Minoan eruption blew apart the volcano's center, collapsed the island's interior and formed the immense caldera; thus Thirasia was cut off and remained on the western side of the crater.
Thirasia holds a distinct place in Aegean archaeology. Already in 1866–1867, when the island was being quarried for the famous volcanic "Thiraic earth" used in the construction of the Suez Canal, prehistoric buildings and finds came to light — a discovery that preceded the major excavation of Akrotiri in Santorini and first drew scholarly interest to the prehistoric civilization of the region.
In antiquity the island lay in the shadow of the powerful Ancient Thera. After the Roman and Byzantine periods, with the Frankish rule Thirasia passed, together with Santorini, under Venetian dominion and was incorporated into the sphere of the Duchy of the Aegean, all the while enduring pirate raids that forced its inhabitants to build far from the sea.
Under the Ottoman Empire and later, within the modern Greek state, Thirasia remained a poor but proud rural island, its economy based on vineyards, wine and volcanic products. As neighboring Santorini transformed into a world-famous tourist destination, Thirasia was gradually depopulated — and precisely for this reason it preserved intact the authentic look of "old Santorini".