It neighbors Otay Mesa West to the north, Otay Mesa to the east, and Nestor and the Tijuana River Valley to the west; together these communities form South San Diego, a practical exclave of the City of San Diego.

In 1829 it granted Santiago Argüello Moraga the 10,000-acre Rancho Tía Juana, which covered parts of what now are San Ysidro and Tijuana; his son Emigdio Argüello was granted the adjacent Rancho Melijo in 1833, on which they built "La Punta", an adobe house that was one of very few structures in the area until the late 1800s.

In 1887, real estate firm Hart and Stern developed Tia Juana City on the site of today's Las Americas Premium Outlets, consisting of a single street with a drug store, saloon, hotel and boot shop and some scattered houses beyond.

Floods washed out buildings in 1891 and 1895; Tia Juana City was not immediately rebuilt and settlers moved to higher ground.

[4] The Little Landers colony was a community founded by William Ellsworth Smythe in 1908 with the motto, "A little land and a living surely is better than desperate struggle and wealth possibly."

Each member of the community held a plot of land no bigger than they could cultivate themselves, averaging 2 acres (8,100 m2) each, in order to foster a non-hierarchical social structure.

The city levied a commission on the sale of land which funded public improvements such as a library, park, irrigation systems, and a clubhouse.

"[4] In 1924, the $12,000 San Ysidro Free Public Library opened; civic leader Frank Beyer donated the land as well as $7,000 towards the cost.

[4] After 1933, with alcohol legalized in the U.S., gambling outlawed in Mexico and fewer American visitors to Tijuana, some homes were purchased by Mexican citizens working in the U.S.[4] Following World War Two, there was a housing shortage in San Diego and as a result, new houses, apartment buildings and bungalow courts were built in San Ysidro.

[10] On July 18, 1984, James Oliver Huberty, a 41-year-old former welder from Canton, Ohio, opened fire inside a McDonald's restaurant with multiple firearms (including an Uzi), killing 21 people and injuring an additional 19 people, before he was fatally shot by a sniper from a SWAT team.

[16] The great majority of these are workers (both of Mexican and U.S. nationality) commuting from Tijuana to jobs in the greater San Diego area and throughout southern California.

There is also reverse traffic, both of workers traveling to maquiladoras in Mexico and those purchasing services or seeking entertainment in Tijuana.

2009 studies estimated that wait times for vehicles at the San Ysidro LPOE averaged 1.5 to 2 hours during the commuter peak period.

[17] For pedestrians, in 2012, morning waits to enter the United States could last more than two hours — and twice that time during peak weekend periods.

The area is serviced by the southern division headquarters at 1120 27th Street and a small substation at 663 E. San Ysidro Blvd.