Phaistos. Crete. Greece. View of long staircase that leads down from the upper court to the west court of the palace of Phaistos. . The Minoan palatial city of Phaistos or Phaestos was the second most important Minoan palatial city in Crete after Knossos and is situated in central southern Crete in the Iraklio prefecture. Crete is Greece’s largest island and the fifth largest island in the Mediterranean.