The island of Crete is currently served by an autonomous electrical system being fed by oil-fired (Heavy fuel or light Diesel oil) thermal power plants and renewables (wind and PVs). The peak load and annual electric energy consumption are approximately 600 MW and 3 TWh respectively; wind and photovoltaic parks contribute approximately 20% of the electricity needs of the island. Due to the expensive fuel used, the Cretan power system has very high electric energy generation cost compared to the Greek mainland. On the other side the limited size of the system poses severe limitations to the penetration of renewable energy sources, not allowing to further exploit the high wind and solar potential of the island. According to the Ten Year Network Development Plan (TYNDP) of the Greek TSO (Independent Power Transmission Operator S.A. IPTO S.A.), the interconnection of Crete to the mainland Transmission System of Greece will be realized through two links: A 150 kV HVAC link between the Peloponnese and the Crete (Phase I) and a HVDC link connecting the metropolitan area of Athens with Crete (Phase II). The total length of submarine and underground cable of the HVAC link will be approximately 174km; it is at the limits of the AC technology and the longest and deepest worldwide at 150 kV level. A number of studies have been conducted by a joint group of IPTO and Hellenic Electricity Distribution Network Operator (HEDNO) for the design of this interconnection. This paper presents briefly the power system static and dynamic studies conducted for the design of the AC link and its operation. Firstly, the paper presents the main results of the static security study regarding the calculation of the maximum power transfer capability of the link and the selection of the reactive power compensation scheme of the cable. Results from dynamic security analysis studies are also presented. The small-signal stability analysis concludes that a new (intra-area) electromechanical oscillation is introduced to the National System after the interconnection. The damping of the electromechanical oscillations is sufficient; however the operation of power system stabilizers at power plants located both at the mainland and at Crete power system can increase significantly the damping of important oscillation modes. Finally with respect to the risk of loss of synchronism after a significant disturbance in the system of Crete, such as a three-phase fault (“transient stability”)- enough safety margin is estimated by means of Critical Clearing Time calculations.