The Genoese, regarding the situation as de facto, dug a moat around the area and then built tall, terraced houses which resembled the walls of a castle. At the first opportunity they closed the gaps between the houses with high walls, thus enclosing the entire area in what amounted to a city wall. In contrast to the declining Byzantine empire Galata became the main commercial centre on the trade route running from Central Asia via the Black Sea. The Genoese had put a few token ByzantIne coats of arms on their walls but they continued to expand the walls of Galata, which was entirely under their rule, First of all they built the Galata Tower and the walls to its north in 1349, then the walls in the KarakOy district, then the walls enclosing the Kuledibi and Sishane districts (1387), and the section in the Azapkapisı-Sishane district which completed the system in 1397. Finally, in 1404. the built the walls which enclosed the area between Karakoy and Tophane. thus extending the boundaries of their colony. Then they adorned these walls with the coats of arms of their administrators, thus demonstrating to whom the city really belonged.

Byzantium was unable to take any action to prevent these developments, which were going on right under their noses. Furthermore, the Byzantine empress Paledogina, who was of Italian origin, (she was in fact Princess Sofia of Monteferrato), tired of the ill-treatment to which she was subjected by her husband loannes VIII, fled to Galata in the 15th century and the Byzantines were unable to get her back. Galata remained completely neutral while the city of Istanbul was being beseiged and captured by the Turks and in 1453 they signed an agreement with Mehmet the Conqueror. Galata had come under the jurisdiction of a cadi (Muslim judge) and was thus under Turkish administration but this was achieved in a peaceful manner. However, the Ottomans turned a blind eye to the existence of the Latin community organisation, which legally administered the churches, until 1682.

Byzantium , which had been unable to prevent the Italians from setting up a colony on their land, was steadily shrinking and was now confined to the area within the city walls and one or two settlements along the Bosphorus and on the islands . In 1391 the Ottoman sultan Ytldirim Bayezid built the Anadoluhisar fortress on the Asian side of the Bosphorus and later Mehmet the Conqueror built the Rumelihisar fortress on its European side - and the Byzantines could do nothing but watch helplessly. The city which the victorious Turkish army entered on 29 May 1453 was by then nothing more than the last fortress of a great empire.