This Italian city-state attained great prosperity through an astute blend of commercial enterprise, military coercion, and diplomatic influence. Venice's commercial success owed much to its early association with Byzantium, which connected it with trade networks to the East. By the 900s, it had assembled a fleet of merchant and military ships that dominated the Adriatic Sea. By the mid-1000s, Venetian ships, along with those of rival Genoa, controlled a significant part of the maritime traffic in the eastern Mediterranean. During the 11th and 12th centuries, Venice enhanced its commercial influence by providing much needed naval protection to the beleaguered Byzantine Empire in return for trade privileges.

In 1201, the Venetians agreed to provide transport and provisions for a Fourth Crusade to the Holy Lands. The planned venture began to disintegrate after the financially strapped Crusaders proved unable to pay for the services. A complicated tangle of political events ensued. These culminated in the occupation and sack of Constantinople. As one of the participants, Venice came away from the enterprise with several new island and coastal territories, further trade concessions, and new commercial facilities within Constantinople itself.

By the early 1300s, the city-state had annexed most of the towns in its immediate hinterland in northern Italy. In 1380, it defeated its main rival, Genoa, in a costly war born of the desire for a monopoly on the Eastern trade. During the following half-century, Venice expanded territorially onto the Dalmatian coast, also acquiring part of Albania, Corfu, Greece, Crete, and several Aegean Islands. By this time, the Venetians were also operating trading posts in the East. While Genoa gradually gained superiority in the Black Sea area, Venice continued to exert substantial influence on commercial traffic with Egypt and the eastern Mediterranean.

Map of Venetian Territories during the 15th Century

Venice was well placed to benefit commercially from the military traffic that moved between Europe and the Holy Land during the Crusades, and from the subsequent increase in the volume of trade flowing between Europe and the Middle East. Its ruling commercial oligarchy wielded its military and political power with the commercial intent of dominating the Eastern trade. It helped plot out the trade routes Venetian merchants followed, provided military convoys to ward off competitors, and collected hefty duties from traders importing Eastern cargo. It owned the Venetian galleys that plied the waters of the Adriatic and Aegean Seas and other parts of the Mediterranean, renting space on the vessels to city merchants.

Venice's rulers confined resident foreign traders to special merchant quarters, the Fondaco Dei Tedeschi, and limited their business activities to the trans-Alpine land trade, demanding a hefty fee from northern European participants.