In this paper, I examine the institutional changes in the island of Crete during the German Occupation (1941-1945). The local institutions were loosely connected with the rest of the Greek administration but tightly connected with the German military command on the island. The turn of the war in the Mediterranean set new duties to the local administrative staff, such as the economic exploitation of the local population and their alignment with the Nazi visions for a New Europe. These new duties disrupted the prewar hierarchies as collaborationists ook the opportunity to upgrade their position. This paper will examine the changes on the institutional level and in the daily life of the local administration during the Occupation. Through this examination, new questions arise concerning the economic and political reality of wartime Crete. This paper is a part of an extended study on the Occupation in Crete.