Britannica Sources used in this answer

When and why was Valletta founded?

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Valletta was founded in 1566 following the Great Siege of Malta in 1565.12

The city was established by the Hospitallers (Knights of St. John of Jerusalem) to serve as a fortified capital after the siege successfully checked the advance of Ottoman power in southern Europe. It was named in honour of Jean Parisot de la Valette, the grand master of the order who led the successful defence of the island.12