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Region of central Peloponnese (area 3).
Arcadia owes its name to the mythological hero Arcas, the son of Zeus and the nymph Callisto. By his mother, Arcas was a grandson of Pelasgus, the eponym of the Pelasgians, a people living in Greece before the Hellens. There are different traditions about Pelasgus, depending on whether they come from Arcadia, Argolis or Thessalia, all regions that were once occupied by Pelasgians. In the Arcadian tradition, Pelasgus is the son of Zeus and Niobe, herself daughter of Phoroneus, the first human being. Pelasgus was thus the brother of Argos. He was the first inhabitant of Arcadia and the first king of that country, teaching his people to build houses and to sort out useful plants from weed. He had a son named Lycaon and a daughter named Callisto.
Lycaon (whose name comes from the Greek word meaning "wolf") became king of Arcadia at the death of his father Pelasgus. From various wives, he had fifty sons, most of whom were the eponym heroes of many cities of Peloponnese (though traditions that have come down to us don't agree on the names of these sons). Lycaon and his sons had little respect for the gods and one day, Zeus decided to check by himself how irreverent they were. Under the guise of a laborer, he asked for hospitality at their court. Lycaon, who wanted to test if he was actually a god, served him the flesh of a child (some traditions say it was the flesh of one of his own children, or of his grandson Arcas, who was later reassembled and revived by Zeus). Zeus was not fooled and, in his anger, struck him with lightning, along with all his sons but one,the youngest, called Nyctimus, who was saved by Gæa (the goddess Earth) and succeeded him on the throne (he was king in the time of Deucalion's flood). According to other traditions, Lycaon was changed into a wolf. This version probably relates to the tradition of human sacrifices to Zeus Lycean, whose sanctuary was on a mountain named Lycæon in southwestern Arcadia. There, attendants to the sacrifice would share in the eating of their victim's entrails, and, as a result, were changed into wolves, and could return to a human form only if, after eight years, they had not eaten human flesh again (Plato refers to this legend at Republic, VIII, 565d when describing the transformation of a leader into tyrant).
Meanwhile, Callisto, Lycaon's daughter, had pledged to stay a virgin and was spending her life hunting in the company of the goddess Artemis, Apollo's sister. But Zeus fell in love with her and seduced her by taking the form of either Artemis or her brother Apollo. From Zeus, Callisto gave birth to Arcas. But, because she had not kept her pledge of virginity, or upon request from a jealous Hera, Artemis killed her. Zeus, then, changed her into the constellation Ursa Major (the great bear) and entrusted their son Arcas to Mæa, Hermes' mother, who raised him. In some traditions, Arcas had a twin brother, the god Pan (though other traditions give Pan as Arcas' father). Arcas succeeded Lycaon's son Nyctimus as king of the Pelasgians of Peloponnese, who were hereafter called Arcadians, their country being thus called Arcadia. Arcas was said to have taught his people to grow wheat, cook bread and spin wool.

From a more historical standpoint, it seems that the inhabitants of Arcadia didn't change much over time and resisted invasions. The population remained for long disseminated in many small villages and it is not until the end of the VIth and beginning of the Vth century B. C. that two cities developed in Arcadia : Mantinea and Tegea.
Arcadia is a relatively poor and dry country in which it is hard to grow crops. In ancient times, it was primarily a region of cattle rearing, with herds of horses, sheep and goats, in which shepherds, under the protection of their god Pan (whose origin can indeed be traced back to Arcadia), occupied a leading position, unlike what was the case in the rest of Greece. Arcadia was also a country of marshes, in basins enclosed by mountains that retained rain water, which constituted ideal bird-hunting grounds. Despite the harshness of their country, the Arcadians were known for their mild manners and love of music, which may explain why they played a leading role in Greek representation of the origins of man. Yet, they were also good fighters and were in great demand as mercenaries.