The present town rose after a disastrous landslide on 6 june 1682, that destroyed the village of Santo Stefano di Mistretta, whose inhabitants moved then to a safer position. The reconstruction was planned by Giuseppe Lanza Barresi, an enlightened aristocrat and great humanitarian figure, who had the titles of Alcantara knight, Duke of Camastra and Prince of Santo Stefano. In his honor the name was changed to Santo Stefano di Camastra. The Duke also founded and supported the Collegio di Maria, an educational institution for poor girls, an orphanage and the Convento dei Frati Minori.
The plan of the new town, a diamond inscribed within a square, was inspired by both Versailles and Villa Giulia in Palermo, with wide streets sided by palm trees and green areas. The square is oriented to the cardinal points, its axes are the diagonals of the diamond inside, then tracing all connections the lines become streets, the junctions become square, according to the models of ideal urban schemes typical of the Renaissance. Though since the late 18th century the original borders were not enough to contain the increased population, it is still possible to see the original design, with sides 200 mt long, enough to host an ideal population of 2,000 people.