Some sources claim that the name of the city formulated in the plural number and is considered to have its origin from the ancient Greek word ἅλς (als) - ἅλας (alas), "salt", plural ἅλατα (alata), "salts", in the Demotic Greek αλάτι (alati), "salt", plural αλάτια (alatia), "salts", which enunciate as Alatzata and Alatsata either due to Turkish alteration of the language (e.g. in Turkish, the word “kalderim” (meaning cobbled road - originated from the Greek kallidromon) or according to a local Greek dialect.

[citation needed] Their claim is based on a story, that the ruler of Alaçatı had a red horse to ride.

[citation needed] Some resources claim that the name "Ala çatı" (Iridescent Roof) derives from strong winds causing laundries to fly away and land on neighbour houses.

[citation needed] According to the statistics of the High Commission of Smyrna in May 1914, the number of Greek inhabitants of Alatsata that were forced by the Turks to be expatriated were 14.000.

[8] Muslim refugees from Greece were settled here, and ever since then the name Alaçatı has been adopted both for the town and the harbour area.

The harbour area was called 'Agrilia' (Greek: Αγριλιά, "wild olive tree"), and was the export port of İzmir until World War II.

[13] Under the Treaty of Lausanne in 1923 and according to the implementation of the compulsory exchange of populations, Muslims who fled Crete, Thrace, Macedonia and Dodecanese settled in Alatsata city in the houses abandoned by the Greeks.

[citation needed] Alaçatı has stone houses with coloured windows and narrow streets with pavements.

The very centre of Alaçatı is famous for viticulture and winemaking as wine factories spread throughout the region of Çeşme but recently the town has picked fame with its developing tourism, boutique hotels and especially with windsurfing.

As part of this project, which is expected to last through 2016, over 3,000 mastic tree saplings were planted between 2008 and October 2011 to over 368 acres (149 hectares) of dedicated farm areas provided by the Izmir Institute of Technology.

A great number of Alatsatean refugees were settled in Greece after they were forcibly removed from their homeland, in Attica, Euboea, Crete, Chios, Lesvos, Samos, Thessaloniki and in Agrinion.

Regions with settlements, bearing the name New Alatsata ("Νέα Αλάτσατα" in Greek) exist in the Municipality of Vyron, in Athens, in Chalkis and in Heraklion of Crete.

Besides Greece, Alatsateans migrated to almost all continents but mostly to the United States of America, where in Somerville, in Boston the Small Alatsata was founded.