The area that now makes up downtown was first settled twenty years later, when the town of San Jose moved somewhat inland from its original location on the banks of the Guadalupe River.

The San Jose Redevelopment Agency, the largest such group in the state, would eventually become a key player in revitalizing the downtown area and, to a lesser extent, surrounding neighborhoods.

As part of its apparent effort to stimulate economic growth and increase tax revenue within the downtown community, the San Jose Redevelopment Agency began encouraging builders to construct high-rise residential towers, and the agency offered subsidies and lifted the requirement to provide affordable units that were characteristic of other redevelopment projects throughout the city.

[1] Many of the 19th century buildings in central downtown appear on the National Register of Historic Places, in particular the area surrounding St. James Park, such as Trinity Episcopal Cathedral.

In February 2018, San Jose's city council approved a stage of a sale of downtown property to Google for $67 million.

[4] However, in April 2023, it was reported that Google paused on its West San Jose construction projects due to an economic slowdown.

Downtown is also the hub of the VTA light rail system, and the home of the main campus of San Jose State University.