In the Hellenistic period the cityscape of Ephesos undergoes a fundamental transformation. During the wars of the Diadochi after the death of Alexander the Great the city was incorporated from 300 BC onward to the kingdom of Lysimachos (355–281). After the first new foundations of cities (Lysimachia) at Chersonnes and Aitolia, a new city in Ephesos with Arsinoea was founded, named after Lysimachos’ wife Arsinoë II. The inhabitants of Arsinoea were recruited from neighbouring communities such as Teos, Lebedos and Kolophon.
Probably already in 294 BC the construction of a fortification wall over 9 km. enclosing the entire city including the northern slopes of Mount Bülbül and parts of Mount Panayır was started. The 2.5 km² big area within the city walls, of which only one-third was suitable for construction, is divided into a Lower City at the harbour area and to an Upper City over an elevated plateau. Both parts of the city are connected by the Curetes Street which follows the course of the former Processional Way.
The Hellenistic Ephesos is a new foundation after a systematic hippodamic model with orthogonal street raster. In the Lower City the mercantile and cultural centre with the Commercial Market (Tetragonos Agora), the Theatre and the Stadium are located, whereas in the Upper City with the Upper Agora (Staatsmarkt), Prytaneum and the Bouleuterion the political centre was founded. The city grew at the slopes of the two city-mountains and especially over the convenient plateau of the Upper City to the south and east of the Upper Agora. Little is known about the actually built-up area however it may have come to a partial retreat of the settlers following the death of Lysimachos in 281 BC. Since the 2nd century BC simple buildings with workshops were installed at the Terrace House 2 area, at the same time leveling-off activities at the Upper City prove of rebuilding measures taken or an extensive new settlement within the area.
Locally produced wares and their distribution in the Mediterranean region reveal the ever increasing significance and economic power of Ephesos in the 2nd and 1st century BC, which was to become the metropolis of Asiae (capital city of the Province of Asia) during Roman rule.