The bazaar district below the Castle of St Peter is the most atmospheric part of Bodrum's old town — a tangle of narrow streets lined with small shops selling leather goods, ceramics, jewellery, textiles, and the usual tourist merchandise, but also genuine local crafts if you look carefully. The streets are mostly pedestrianised and pleasant to wander, especially in the morning before the cruise ship passengers arrive.
The covered market area near the mosque dates from the Ottoman period and has a different, quieter character from the main shopping streets. Look for sponge divers' gear and dried sponges — the Bodrum peninsula was historically the centre of Turkey's sponge diving industry, and the trade, though diminished, still continues.