It was named for Haim Cohen, a wealthy Jewish businessman who donated large sums of money toward the purchase of land in Jerusalem before World War I.

[1] It was planned as a village of 20 small farmsteads, and was built along one main street which developed parallel to the railway line.

He arranged for the Hamekasher bus company to open a regular route between Mekor Chaim and the city center.

[citation needed] After the Six-Day War, the Talpiot industrial zone was developed, ending the neighborhood's isolation.

In the mid-1980s, the Jerusalem city council established zoning laws to stop the encroachment of commerce and preserve the residential character of Mekor Chaim.