An aition explaining the name of Cephallenia and reinforcing its cultural connections with Athens associates the island with the mythological figure of Cephalus, who helped Amphitryon of Mycenae in a war against the Taphians and Teleboans. He was rewarded with the island of Same, which thereafter came to be known as Cephallenia.
Cephalonia has also been suggested as the Homeric Ithaca, the home of Odysseus, rather than the smaller island bearing this name today. Robert Bittlestone, in his book Odysseus Unbound, has suggested that Paliki, now a peninsula of Cephalonia, was a separate island during the late Bronze Age, and it may be this which Homer was referring to when he described Ithaca. A project which started in the Summer of 2007 and lasted three years has examined this possibility.
Cephalonia is also referenced in relation to the goddess Britomartis, as the location where she is said to have 'received divine honours from the inhabitants under the name of Laphria'.
In the southwestern portion of the island, in the area of Leivatho, an ongoing archaeological field survey by the Irish Institute at Athens has discovered dozens of sites, with dates ranging from the Palaeolithic to the Venetian period.
From an archaeological point of view, Cephalonia is an extremely interesting island. Archaeological finds go back to 40,000 BP. Without doubt, the most important era for the island is the Mycenaean era, from approximately 15001100 B.C. The archaeological museum in Cephalonias capital, Argostoli although small is regarded as the most important museum in Greece for its exhibits from this era.
The most important archaeological discovery in Cephalonia (and indeed in Greece) of the past twenty years is that, in 1991, of the Mycenaean tholos tomb at the outskirts of Tzanata, near Poros in southeastern Cephalonia (Municipality of Elios-Pronni) in a lovely setting of olive trees, cypresses and oaks. The tomb was erected around 1300 B.C; kings and highly ranked officials were buried in such tombs during the Mycenaean period. It constitutes the largest tholos tomb yet found in northwestern Greece and was excavated by archaeologist Lazaros Kolonas. The size of the tomb, the nature of the burial offerings found there, and its well-chosen position point to the existence of an important Mycenaean town in the vicinity.
In late 2006, a Roman grave complex was uncovered as the foundation of a new hotel was being excavated in Fiskardo. The remains date to the period between the 2nd century BC and the 4th century AD. Archaeologists described it as the most important find of its kind in the Ionian Islands. Inside the complex, five burial sites were found, including a large vaulted tomb and a stone coffin, along with gold earrings and rings, gold leaves that may have been attached to ceremonial clothing, glass and clay pots, bronze artefacts decorated with masks, a bronze lock, and bronze coins. The tomb had escaped the attention of grave robbers and remained undisturbed for thousands of years. In a tribute to Roman craftsmanship, when the tomb was opened, the stone door easily swung on its stone hinges. Very near to the tomb, a Roman theatre was discovered, so well preserved that the metal joints between the seats were still intact.
A dissertation published in 1987 claims that St. Paul, on his way from Palestine to Rome in AD 59, was shipwrecked and confined for three months not on Malta but on Cephalonia.
According to Clement of Alexandria, the island had the largest community of Carpocratians, an early Gnostic Christian sect, because Carpocrates lived on the island.