Rebetiko have been around in some form since the turn of the century. In 1923 Greece was faced with the resettlement of over 1.5 million Greeks refugees from Asia Minor. As a result of this, shanty towns grew up around Athens, Piraeus and other cities. These refugees brought their music with them and this had the most pronounced effect on the urban music of Greece. Since the emergence of the modern Greek state, the upper and middle classes leaned towards the classical style of European music while at the other end of the social spectrum Greek and Byzantine traditions prevailed. This poor class of workers had a constant contact with the refugees and their culture. The musicians of these two cultures were constantly exchanging musical ideas.

Rebetiko have always been the music of the poor and the dispossessed, combined different styles of the region and with lyrics describing the joy, the sorrow, the difficulties of everyday life. The best definition of Rebetika is given by Gail Holst in her book The Road to Rebetika: "What was special about the Rebetika song was the combination between traditional musical forms of the Eastern Mediterranean and the words of the songs, which dealt with the life of the urban underworld and the less reputable elements of the society."

Rebetiko has its origins in an oral tradition where improvisation played an important role in both the music and lyrics. Songs always started with an instrumental prelude, the taximi where a musician showed his ability. These Taximi would set the mood for the songs to come and they would last up to twenty minutes. After this the song would start, often with the singer improvising lyrics, sometimes to a familiar tune, mentioning people in the audience and referring on recent events of local interest.

In the 1920's and the 1930's Rebetika could be heard in several Tekedes of Athens, Piraeus and Thessaloniki. These were hash dens where the workers, the unemployed and the Manges would meet to drink coffee and enjoy Argiles (water pipes) of the best hashish. Sometimes a lone man would get up and dance a Zebekiko dance.