One of the oldest streets in Hong Kong, it was dedicated to the 19th-century Prussian Christian missionary Karl Gutzlaff, who also worked for the British East India Company and then the colonial Hong Kong government.

Before the Second World War, the lane was known as "Red-haired Dame Street" (Chinese: 紅毛嬌街; pinyin: Hóngmáojiāo Jiē; Wade–Giles: Hung-mao-chiao Chieh; Jyutping: hong4 mou4 giu1 gaai1) by the locals, "red-haired" then being a common adjective for describing Westerners.

One version goes that, in the old days, western women in Hong Kong were frequently seen near the street, as there were plenty of Chinese shoemakers, who were crafted in making western-style shoes, doing business in that area, hence the name and another nickname "Shoe Repairing Street" (補鞋街; bou2 haai4 gaai1 ).

Another version goes that some western brothels operated there during the early days of colonial Hong Kong, hence the name.

Today the street is known by some local gourmets, as one of the few surviving dai pai dong is located there.