The Liberty opened on October 10, 1904, and in its early years hosted several hit productions, which largely consisted of comedies, dramas, or musicals.

Forest City Ratner developed an entertainment and retail complex on the site in the 1990s, but the Liberty Theatre remained largely abandoned until the early 21st century, when it became a restaurant space and event venue.

In addition, the Port Authority Bus Terminal is to the west, the New York Times Building is to the southwest, and the Nederlander Theatre is to the south.

[6] In the first two decades of the 20th century, eleven venues for legitimate theater were built within one block of West 42nd Street between Seventh and Eighth Avenues.

[7][8] The New Amsterdam, Harris, Liberty, Eltinge (now Empire), and Lew Fields theaters occupied the south side of the street.

[14] The structural frame and emergency exits may have been added in response to the Iroquois Theatre fire in 1903, where hundreds of people died in a Chicago theater that was allegedly fireproof.

[13] The Liberty's stage curtain was made of asbestos, as at many other theaters at the time, and contained a mural of Half Moon, the ship belonging to Dutch explorer Henry Hudson.

[13] The men's lounging and smoking room was decorated in the English style, with weathered-oak paneling as well as furniture covered with Spanish leather.

[26] Klaw and Erlanger hired Herts and Tallant to design the New Amsterdam Theatre at 214 West 42nd Street, which opened on October 26, 1903.

[27] Klaw and Erlanger then decided to build a second theater on the block, also designed by Herts and Tallant,[4] which would host musicals by the Rogers Brothers.

[28][44] Other shows in the Liberty Theatre's early years included The Redskins in 1906 with Tyrone Power Sr., as well as Wildfire in 1908 with Lillian Russell.

[61] The Liberty again hosted live shows in early 1916, when it presented a week of variety performances by The Blue Pierrots troupe,[62][63] as well as the musical Sybil.

[66][67] The Jerome Kern musical Have A Heart opened at the Liberty in January 1917,[68][69] followed the same year by the revue Hitchy-Koo of 1917[70][71] and the play The Wooing of Eve with Laurette Taylor and Lynn Fontanne.

[48][75] Following the success of the Ziegfeld Follies at the nearby New Amsterdam, Klaw and Erlanger presented two revues at the Liberty in 1919:[38][69] George White's Scandals of 1919[76] and Hitchy-Koo of 1919.

[86][87] The theater's shows the next year included the play Magnolia with Leo Carrillo and The Magic Ring with Jeanette MacDonald.

[97][98] Erlanger announced in April 1926 that the Liberty Theatre would be completely renovated after Tip-Toes ended that June,[99] and the theater reopened that September.

[103] 234 West 42nd Street Inc., which Klaw and Erlanger had formed to manage the Liberty Theatre, was evicted from the theater in 1931 after failing to pay rent.

[142] The same year, the City University of New York's Graduate Center hosted an exhibition with photographs of the Liberty and other theaters to advocate for the area's restoration.

[154] While the LPC granted landmark status to many Broadway theaters starting in 1987, it deferred decisions on the exterior and interior of the Liberty Theatre.

[158] The Urban Development Corporation (UDC), an agency of the New York state government, proposed redeveloping the area around a portion of West 42nd Street in 1981.

[167][168] The project was to be completed by the Times Square Redevelopment Corporation, comprising members of the New York state and city governments.

[169][170] David Morse and Richard Reinis were selected in April 1982 to develop the mart,[168][169] but they were removed from the project that November due to funding issues.

[177][178] City and state officials announced plans for the Liberty Theatre, along with five theaters on the north side of 42nd Street, in September 1988.

[188][192][193] Government officials hoped that development of the theaters would finally allow the construction of the four towers around 42nd Street, Broadway, and Seventh Avenue.

[196][197] Meanwhile, the Liberty continued to deteriorate, leading theatrical critic Mel Gussow to write in 1990 that the orchestra level had been "almost entirely reduced to rubble".

[201] By 1995, real-estate development firm Forest City Ratner was planning a $150 million entertainment and retail complex on the site of the Empire, Harris, and Liberty theaters.

[17] The Liberty was used for a staged reading of T. S. Eliot's poem The Waste Land, a solo performance by Fiona Shaw, in late 1996.

[207][208] The same year, GameWorks negotiated with Forest City Ratner to open a virtual-reality arcade in the theater,[17] although the Liberty remained empty through the late 1990s.

[216] During 2015, Cynthia von Buhler staged the immersive play Speakeasy Dollhouse: Ziegfeld's Midnight Frolic, whose storyline investigates the death of actress Olive Thomas, at the theater.

[218] Ripley's closed permanently in 2021 due to the COVID-19 pandemic, and real-estate agency Cushman and Wakefield was marketing the Liberty Theatre for lease.