Home to the headquarters and major manufacturing plants of two large corporations, General Electric and American Locomotive Company, Downtown Schenectady catered to tens of thousands of workers in its heyday.

Typical of the post-industrial Northeastern United States and Upstate New York in particular, Downtown Schenectady saw a decline in manufacturing and population starting in the 1970s.

Recent construction and renovation has caused the downtown area to become an entertainment mecca for New York's Capital District anchored by Proctor's Theatre.

In July 1806, the college determined to acquire a large tract of land to the east of the main settlement in Schenectady, on a gentle slope up from the Mohawk River and facing nearly due west.

This tract was not promisingly described by college president Eliphalet Nott some years later as “pasture grounds, scarred by deep ravines, rendered at once unsightly and difficult of access by an alternation of swamp and sand hill…”.

From ALCO's plant several historic products came from Downtown Schenectady including the first diesel-electric locomotive in 1924 (also- 1929 first of that type for passenger use), the largest locomotive at the time in the world in 1941, M-36 tanks and all 3,314 M-7s built, 1,000 of which were present at El Alamein during World War II, and boilers and turret rollers for the US Navy, including those on the USS Missouri.

[5] It was thanks to these industries at opposite edges of Downtown that Schenectady earned the nickname "The City that Lights and Hauls the World".

[6] Another failed attempt at urban renewal was the $11 million Canal Square shopping plaza next to Proctor's Theatre in the 1980s.

This was praised by then-President of the United States Ronald Reagan as an example of the good that could be done by the smart use of urban renewal money.

[7] In the 1980s, thousands of GE jobs were downsized in Schenectady, and when GE moved the headquarters for its Power Systems division with the hundreds of high paying white-collar jobs with it to Atlanta, Georgia, Schenectady County took action with the creation of the Metroplex Development Authority.

[13] The renovation cost $30 million and involved building two new theaters including an Iwerks screen, an expanded backstage area that allowed it to attract larger Broadway plays, and a power plant to produce electricity, heat, and air conditioning to the theater and sells excess to the surrounding properties.

[14][16] That same year the Golub Corporation, parent to Price Chopper Supermarkets, moved from the Schenectady suburb of Rotterdam to Downtown.

The location chosen was a former American Locomotive Company (ALCO) site (and later a Big N Supermarket Shopping Plaza) that was heavily polluted.

10,000 tons of dirt and more than 400,000 gallons of contaminated groundwater needed to be removed, state and federal funding assisted in covering the costs.

[19] On January 8, 2007, however, U.S. News & World Report published an article in which the author discussed the city's industrial past, as home to General Electric and the American Locomotive Company, and then the city's steady loss of thousands of GE jobs and the closure of the locomotive plant in the late 1960s as emblematic of Upstate New York's urban decline.

Schenectady Mayor Brian Stratton responded in a letter to US News that was published in the January 29 – February 6 edition citing that the article failed to note the $150 million invested in downtown over the previous three years, including the new movie theater, hotel, restaurants, offices, and Proctor's expansion.

[22] The Western Gateway Bridge carries NY Route 5 (State Street) across the Mohawk River to the village of Scotia.

[24] Downtown Schenectady is also host to many cultural events throughout the year, such as the Urban Arts Show with over 500 artist's works, Jazz on Jay which is a free noon-time concert held on the corner of Jay and State street, and the annual Schenectady County SummerNight which includes live music, carnival games, and fireworks.

[32] The main branch of the Schenectady County Public Library is located downtown and is undergoing in 2010 a $2.6 million expansion that will add 6,700 square feet (620 m2) with a new children's room and up-to-date technology.