The westernmost part of the highway is known as the South Bay Freeway, beginning at Interstate 5 (I-5) in National City and running along the Sweetwater River before ending at the intersection with SR 125 and Jamacha Boulevard near Spring Valley.

The roadway continues east for several miles past the Westfield Plaza Bonita mall through suburban Paradise Hills in San Diego.

Jamacha Boulevard veers northeast as an undivided highway through Spring Valley until it reaches Campo Road; it is only designated as County Route S17 (CR S17), while some maps do consider this part of SR 54.

[8] In early 2012, the interchange with I-5 was among the top ten most congested segments of highway in California Department of Transportation (Caltrans) District 11, which includes the San Diego metro area.

The freeway west to I-5 and the Sweetwater River flood channel were built at the same time, although both were delayed due to environmental concerns and litigation.

[13][19] Meanwhile, SR 54 was officially designated in the 1964 state highway renumbering as the road from I-5 near the Sweetwater River to I-8 in El Cajon,[20] replacing Route 280.

[24] Two years later, county officials expressed concerns over the delay of state and federal approval and considered building the freeway without the flood control component of the project.

Fish and Wildlife report predicted that the project would destroy 20 acres (8.1 ha) of marshland and harm three bird species that were endangered, among other negative environmental consequences; the conclusions were disputed by local officials.

[36] In 1976, Caltrans said that SR 54 had not been included in plans for the next six years, due to a lack of funds and a shift in priorities from new roads to maintenance.

[37] The water subcommittee of the U.S. House of Representatives later recommended that the wildlife refuge be put on hold, since the U.S. Army Corps of Engineers (USACE) had not finished their proposal.

[38] Over the next few years, support for the project was expressed by a local citizens' group,[39] the Chula Vista city council,[40] and the San Diego Chamber of Commerce.

[41] By 1980, the USACE was working to obtain funds, which was the major obstacle for completion; public concerns about the project were that it was not needed and would be too costly.

[43] Work on the part west of I-805 and the I-5 interchange started in May 1984, with the construction of a detour for I-5; USACE paid for some of the costs, and federal funds related to the Interstate Highway System were also used.

[44] That same year, the county agreed to create a wildlife preserve on 188 acres (76 ha) of marshland to resolve the environmental concerns.

[45] Meanwhile, the existing part of the South Bay Freeway had become the "most dangerous five-mile stretch of highway in the county", as declared by the local fire chief, due to the 282 traffic accidents that had occurred on the road from 1977 to January 1985.

[55] Other animal bones were found at the site, near Reo Drive in National City, including those of a bison, a camel, a gopher, and horses.