[5] In 1996 the Premier Jeff Kennett announced that the Gas & Fuel Buildings would be demolished, and the railyards roofed, and a complex including arts facilities and a large public space would be built.

The winner announced on 28 July 1997,[8] a consortium led by Lab Architecture Studio directed by Donald Bates and Peter Davidson from London, with the Dutch landscape architects Karres en Brands,[9] directed by Sylvia Karres and Bart Brands, teamed with local executive architects Bates Smart for the second stage.

[10] The design, originally costed at between $110 and $128 million, was complex and irregular, with gently angled 'cranked' geometries predominating in both the planning and the facade treatment of the various buildings and the wintergardens that surrounded and defined the open spaces.

A series of 'shards' provided vertical accents, while interconnected laneways and stairways and the wintergarden would connect Flinders Street to the Yarra River.

The design was also soon criticised when it was realised that the western freestanding 'shard' would block views of the south front of St Paul's Cathedral from Princes Bridge.

[12] Budgets on the project blew out significantly due to the initial cost being seriously underestimated, given the expense of covering the railyards, changes to the brief, the need to resolve construction methods for the angular design, and the long delays.

[16] Unlike many Australian landmarks, it was not opened by the reigning monarch, Elizabeth II, nor was she invited to its unveiling; she visited Federation Square in October 2011.

There have been proposals for office towers and, more recently, a combination of open space and a hotel, or another campus for the National Gallery of Victoria to house their contemporary art collection.

[20] Apple cancelled the plans in April 2019 after the application to Heritage Victoria to demolish the Birrarung Building was denied,[21] and after a hearing, the square was formally listed in August 2019.

In early 2022, following the decision to build a new National Gallery Victoria Contemporary behind the NGV, with a linear public space connection through to St Kilda Road, the State Government established the Melbourne Arts Precinct Corporation to manage the delivery of the new park, the management of Federation Square, and to better connect the various arts institutions in Southbank to each other and through to the CBD.

[27] Federation Square occupies roughly a whole urban block bounded by Swanston, Flinders, and Russell Streets and the Yarra River.

The paving is designed as a huge urban artwork, called Nearamnew, by Paul Carter and gently rises above street level, containing a number of textual pieces inlaid in its undulating surface.

A key part of the plaza design is its large and fixed public television screen, which has been used to broadcast major sporting events such as the AFL Grand Final and the Australian Open every year.

The built forms are mainly slightly bent north–south volumes, separated by glazed gaps, a reference to traditional Melbourne laneways, with vertical 'shards', attached or freestanding, containing discrete functions like the Visitor's Centre, or lifts and stairs.

The larger built volumes are relatively simple reinforced concrete buildings with glass walls, but with a second outer skin of cladding carried on heavy steel framing, folded and stepped slightly to create angular undulating surfaces.

The riverfront areas extend south to an elevated pedestrian promenade which was once part of Batman Avenue and is lined with tall established trees of both deciduous exotic species and Australian eucalpyts.

In the Federation Square complex, there are a number of flagpoles, most notably a group of four, three of which permanently fly the Australian, Aboriginal, and Torres Strait Islander flags.

The following countries' flags have been raised at Federation Square and/or its surroundings at least once: In addition to a number of shops, bars, cafés and restaurants, Federation Square's cultural facilities include: The Melbourne Visitor Centre was located underground, with its entrance at the main corner shard directly opposite Flinders Street Station and St Pauls Cathedral and its exit at the opposite shard.

The Visitor Centre was intended to replace a facility which was previously located at the turn of the 19th-century town hall administration buildings on Swanston Street.

[30] The Ian Potter Centre, also known as the NGVA, houses the Australian part of the art collection of the National Gallery of Victoria (NGV), in the building along the eastern side.

In 2003, ACMI commissioned SelectParks to produce an interactive game-based, site-specific installation called AcmiPark, which replicated and abstracted the real-world architecture of Federation Square.

These events have been held in the square's outdoor area the Atrium and usually require an entry fee in exchange for a set number of tastings.

A judge from Virtual Tourist justified Federation Square's ranking on the ugly list claiming that: "Frenzied and overly complicated, the chaotic feel of the complex is made worse by a web of unsightly wires from which overhead lights dangle.

[32] The Australian Financial Review later reported that some Melburnians have learned to love the building, citing the record number of people using and visiting it.