The best you can hope for is an acceptable experience: the cab takes you where you want to go by the shortest route, and you pay the correct fare as shown on the meter.
Far too often, you are likely to have a bad experience:
1. The taxi refuses to take you where you want to go because the distance is not far enough to amount to a large enough fare. No matter that you have lots of luggage, or can't walk well, or are carrying a baby, or simply have a right to go where you want to go. Tough luck!
2. The taxi takes you where you want to go, but refuses to run the meter, and you are charged an exorbitant fare, which you can only reduce by arguing unpleasantly with someone who does not speak your language.
3. The taxi runs the meter and takes you where you want to go by a roundabout route which wastes your time and cost far more than it should.
4. The trip goes okay, but the driver expects a big tip because you're a foreigner (Turks don't tip taxi drivers).
5. The driver drives like a maniac, seeming happily to imperil not only his own life, but that of other drivers, and yours as well.
There is some good news: the first four rules above apply mostly (but dependably) to taxis accepting fares in and around Sultanahmet Square and other super-touristy areas. (Rules 3 and 5 apply to taxi drivers in much of the world.)
Here's a real-life example from a TTP visitor:
"...every taxi ride, despite settling on fares (even writing it down so it was crystal clear), always ended up being an issue, i.e., more. From the airport in a yellow cab we clearly settle on 30TL with no meter turned on. Half way into town, driving at over 150 kph sometimes, the drive turns on the meter which somehow says 43 TL and when we got to [our hotel] it was about 60TL. But I only paid 30 TL which I made the guy at the hotel handle the transition."
(By the way, I do not recommend that you haggle and settle on a fare in advance. You should get the taxi driver to use his meter so you pay the official fare. If the metered fare seems excessive (ie, if the driver has taken "the long way"), do try to get your hotel to intervene and mediate.—TB)
How to Avoid Unpleasantness
1. Have your hotel call a taxi from a local taxi stand so that you have someone to complain to if service is not acceptable.
2. From either of Istanbul's two airports (Atatürk/IST, or Sabiha Gökçen/SAW), use Backpackers Travel's excellent private transfer service in a comfortable Mercedes-Benz minivan that costs about 40% more than a taxi, but is 1000% more pleasant, safe, comfortable and assured—great value for money. More...
4. Use public transport! (Tram, Metro, Bus, Tünel, Füniküler, Sea Bus, ferryboat, suburban train.) In fact, Istanbul traffic is now so heavy that travel by public transport is often faster by tram and Metro than by taxi. (Here are the city's traffic webcams.) It is frequent, reasonably comfortable, and using an Akbil pass a one-hour, 15-km trip all the way across the city need cost no more than the first minute in a taxi.
How to File a Complaint
The license plate number of each taxi is painted prominently on both sides and the roof of each taxi. Note the number, date and time, and location(s) of the incident and send a description to the Istanbul Public Transport Services Directorate:
More About Istanbul Taxis
Most are powered by clean-burning LNG (liquified natural gas), and all have digital meters which the drivers are required by law to run—though that doesn't mean they always do run them.
If your driver doesn't start the taksimetre, or tries to haggle at the start of the trip instead of running it, just point to the meter emphatically and say Taksimetre! (TAHK-see-MEHT-treh) It'll probably be cheaper on the meter than if you let him just charge you what he wants at the end of your trip.
The rate is the same day and night. (There used to be separate Gündüz (Day) and Gece (Night) rates. Now there is just one rate.)
Many taxis are small yellow cars that seat two comfortably in the rear seat, three in a pinch (or if you're all endomorphs). One person can sit in the right-front passenger seat if the driver allows, so the total a taxi can carry is four passengers (plus the driver), though most drivers prefer three passengers; and if you have luggage, the taxi may not even be able to take four because few taxis have much trunk/boot space because of the big LNG tank already in there. I doubt that a driver will allow five passengers unless he has a larger car than the standard size (there are some larger ones).
Really, Backpackers Travel's excellent private transfer service is the better option from the airport to the city center if you want a vehicle to yourself. It's good for any trip for which you can plan and reserve in advance, and is much more pleasant, comfortable and secure.
Turks don't tip taxi drivers, they round up the fare. If it ends up being, say, TL9.75, a Turk will just round it up to TL10. In many cases if the fare is TL10.25, the driver will require only TL10, and not bother with the change.
As a foreigner, your driver may assume you'll give a tip, but you needn't unless the driver provides some special service, such as helping with lots of heavy luggage.