The present neighbourhood was the result of the government expropriating Toronto's first Chinatown in the late 1950s to make way for a new city hall and public square.

As a result of the expropriations, a number of businesses and residents based in the city's first Chinatown moved west towards Spadina Avenue during the 1950s and 1960s, later joined by other Chinese immigrants during the 1960s.

Toronto's present-day downtown Chinatown was formerly a Jewish district, although a small Chinese community was already present in this location prior to the 1950s.

[3] With much of Toronto's downtown Jewish population moving north along Bathurst Street, the businesses in this area became largely Chinese.

With the population changes of recent decades, it has come to reflect a diverse set of East Asian cultures through its shops and restaurants, including Chinese and Vietnamese.

[8][5] Competition from commercial developments in suburban Chinese communities also drew wealth and professional immigrants away from downtown.

As many younger, higher-income immigrants settled elsewhere in the city, those left in the district are typically from older generations who depend on downtown's dense concentration of services and accessibility to public transportation.

A non-for-profit organization funded by the commercial property owners of the downtown Chinatown area, it was founded in 2007 and works closely with representatives of the federal, provincial, and city government, the police, as well as community stakeholders to promote and enhance the community as a commercial destination while maintaining its cultural character.

[11][12][13][14] Historically, Toronto's Downtown Chinatown has been represented by immigrants and families from southern China and Hong Kong.

The television series Kung Fu: The Legend Continues was filmed in Chinatown at Spadina Avenue and Dundas Street West for many episodes of its 1993–97 run.