Byzantium was chosen as the capital of the Roman Empire for its strategic benefits, central position and excellent harbor. Byzantium also symbolized a break from Constantine's predecessors.
Constantine located the capital of the unified Roman Empire on the site of old Byzantium. There were several reasons for his choice, both practical and symbolic. Firstly, Byzantium was closer to the center of the empire making control easier. Rome had become a periphery and Diocletian's choice of Nicomedia in the east was difficult to defend.
The defensive capabilities of Byzantium also made it a sound choice with a peninsula open to land on the west and bordered on the south, north and east by water. The addition of the chain across the bay further limited attempts of invasion. Byzantium also had easy access to the Euphrates frontier and Danube River supplying cisterns and aqua ducts with water. The chain and control of the harbor also provided control over trade through the Black Sea.
Symbolically, it provided Constantine with a break from his predecessors as Nicomedia was the choice of Diocletian and Rome the seat of all the rulers before him. Byzantium also represented his victories as it sat opposite the shore where he defeated Licinius to become the emperor of the entire Roman Empire.