This mountain community between Pefki and Stavrohori is 39 kms far from Sitia and 27 kms far from Ierapetra.
The old name was Gras (Greas) and it is thus listed with a population of 305 in the Venetian census. It would seem to be a Venetian family name. The following hamlets also belong to the district of Agios Stephanos: Aori to the north of the village, Agios Antonios near the coast, and near that, Agios loannis and Makrigialos which is now one of the most beautiful seaside villages of the whole province of Lassithi.
On the hill above the village are the ruins of a Venetian fort which must have been built in the 16th century for the defense of the area. Local people today call the hill Castellos and also Fortetsa. It is interesting to note that the keep seems to have been built on the remains of an acropolis of the Geometric period. Organized excavations have not yet taken place but the area has yielded plenty of chance finds of archaeological interest
The church is dedicated to St. Stephen the Martyr who has, also given his name to the village. During the last century Anagnostis Fundalidis (or Papadakis), the celebrated leader of the uprising in Sitia in 1866, married and settled in Agios Stephanos, then known as Gras. Emmanuel Fundalidis was born there in 1850, He was one of the most dynamic political personalities of the district in 1879 and later of liberated Sitia.
From the book "Sitia", N.Papadakis, Arcaeologist,1983.