A settlement at its present location was founded under the name of Symbolon (Σύμβολον) by the Ancient Greeks, for whom it was an important commercial city.

The Genoese built a large trading empire in both the Mediterranean and the Black Sea, buying slaves in Eastern Europe and shipping them to Egypt via the Crimea, a lucrative market hotly contested with by the Venetians.

[citation needed] The ruins of a Genoese fortress positioned high on a clifftop above the entrance to the Balaklava Inlet are a popular tourist attraction and have recently become the stage for a medieval festival.

[citation needed] In 1475, Cembalo City was conquered by the Turks and was subsequently renamed Balyk-Yuva (Fish's Nest) which then became Balaklava.

[citation needed] The town became famous for the Battle of Balaclava during the Crimean War thanks to the suicidal Charge of the Light Brigade, a British cavalry charge due to a misunderstanding sent up a valley strongly held on three sides by the Russians, in which about 250 men were killed or wounded, and over 400 horses lost, effectively reducing the size of the mounted brigade by two thirds and destroying some of the finest light cavalry in the world to no military purpose.

The balaclava, a tight knitted garment covering the whole head and neck with holes for the eyes and mouth, also takes its name from this settlement, where soldiers first wore them.