When initially marked out, the square was named Rynek Nowego Miasta, translating to "New Town Market" as it symbolised the beginning of a new industrial settlement.

[6] The contemporary squared is flanked by four exit points in each direction; Piotrkowska Street to the south, Nowomiejska to the north, Pomorska to the east, and Legionów to the west.

[9] A central marketplace was commissioned by Rajmund Rembieliński, an economist tasked by the Administrative Council of Congress Poland to organise the textile industry across the region.

[12] The surrounding roads were named after towns in proximity to Łódź or after the four cardinal directions, for example Zachodnia, Wschodnia and Północna (West, East and North Streets) retain their original designations to this day.

Its design was conceived by German-born entrepreneur Otto Gehlig [pl], who collaborated on the project with the city's chief architect and planner Hilary Majewski.

Under the Polish People's Republic (1947–1989), some of the square's northern tenement buildings were deemed obsolete and demolished; they were replaced by arcaded apartment blocks in the controversial Brutalist architectural style.

In 1971, the urban area of Plac Wolności became protected cultural property (zabytek), and in 2015 it was inscribed into Poland's more prestigious List of Historic Monuments (pomnik historii).