I think it probably was.

It had a serious volcanic eruption at around a time that would have been good for building legends around it, and you can still see where the volcanic center is that blew to leave the moon-like remainder, plus from that extrapolate to what it would have been like it size and geography before the eruption, and all the archeological stuff found on the island from before the eruption is good enough for it to have had a reputation for being a location of high civilization.

http://upload.wikimedia.org/wikipedia/commons/1/14/Santorini_Landsat.jpg

Based on historical accounts I believe Santorini was the true basis for Atlantis.

-quote-

"The first to write extensively about the myth of Atlantis was the Greek philosopher Plato (ca. 428 – 327). In two of his dialogues, the Timaeus and the Critias, written around 370 B.C.E, Plato claimed he found evidence of Atlantis in then 200 year-old records of the ancient Greek ruler Solon who reportedly heard the story from an Egyptian priest. Plato described a continent at the bottom of the Atlantic Ocean near the Straights of Gibraltar, which was destroyed 10,000 years before his time. Those who believe that the story of Atlantis has a true historical basis point to the existence of the Minoan Civilization, a great and peaceful culture that reigned as far back as 2200 B.C.E. The Minoan island of Santorini, known later as Thera, was home to a huge volcano that erupted in 1470 B.C.E. obliterating everything on the surface of the island. The aftershocks of earthquakes brought tidal tsunamis, which destroyed what was left of Minoan society, thus leading some to believe that Santorini was the “real” Atlantis."

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