British forces had initially garrisoned Crete when the Italians attacked Greece on 28 October 1940, enabling the Greek government to employ the Fifth Cretan Division in the mainland campaign. This arrangement suited the British: Crete could provide the Royal Navy with excellent harbours in the eastern Mediterranean, from which it could threaten the Axis south-eastern flank, and the Ploiești oil fields in Romania would be within range of British bombers based on the island.
The Italians were repulsed, but the subsequent German invasion of April 1941 (Operation Marita), succeeded in overrunning mainland Greece. At the end of the month, 57,000 Allied troops were evacuated by the Royal Navy. Some were sent to Crete to bolster its garrison until fresh forces could be organised, although most had lost their heavy equipment. Winston Churchill, the British Prime Minister, sent a telegram to the Chief of the Imperial General Staff (CIGS), General Sir John Dill: "To lose Crete because we had not sufficient bulk of forces there would be a crime."
Oberkommando des Heeres (OKH, German army high command) was preoccupied with Operation Barbarossa, the invasion of the Soviet Union, and was largely opposed to a German attack on Crete. However, Hitler remained concerned about attacks in other theatres, in particular on his Romanian fuel supply, and Luftwaffe commanders were enthusiastic about the idea of seizing Crete by a daring airborne attack. The desire to regain prestige after their defeat by the Royal Air Force (RAF) in the Battle of Britain the year before, may also have played a role in their thinking, especially before the advent of the much more important invasion of the Soviet Union. Hitler was won over by the audacious proposal and in Directive 31 he asserted that "Crete... will be the operational base from which to carry on the air war in the Eastern Mediterranean, in co-ordination with the situation in North Africa." The directive also stated that the operation was to be in May and must not be allowed to interfere with the planned campaign against the Soviet Union. Before the invasion, the Germans conducted a bombing campaign to establish air superiority and forced the RAF to move its remaining aeroplanes to Alexandria.