The first city in the area was founded in the 3rd millennium BC on the fortress hill, where later cities were to be built. The first phase of the city is characterised by a smaller fortress, about 300 metres in diameter, consisting of 20 rectangular houses surrounded by large walls, towers and gates. Troy I was destroyed by fire around 2550 BC. 

Troy II was built around 2550 BC. Although there is no evidence of a cultural break after the previous settlement, the new city had a very different character. Troy II was destroyed twice. After the first destruction, the citadel was rebuilt with a dense cluster of small houses on an irregular plan. The final destruction took place around 2300 BC. 

Troy continued to be occupied between 2300 BC and 1750 BC. However, little is known about these several layers due to Schliemann's careless excavation practices. In order to fully excavate the citadel of Troy II, he destroyed most remains from this period without first documenting them.

Troy IV (c. 2000–1820 BC) sees the introduction of domed ovens, and mudbrick was used to construct houses without the use of stone foundations for the first time at Troy.

By the period of Troy V (c. 1820–1750 BC), the city had once again expanded outside the citadel to the west. In Troy V, artefacts include Anatolian-style "red-cross bowls" as well as imported Minoan objects. They would trade with other cities around them. Earthquakes during the 18th century damaged parts of Troy V including the ruined houses.