The street was named in honour of king William IV of the United Kingdom of Great Britain and Ireland upon its opening in 1834.

The Cross City Tunnel, a tolled motorway, follows much of the route of William Street and extends further west to the Western Distributor.

William Street was built through the farm land of the valley between the city centre and Potts Point in the 1830s to allow traffic to and from the fashionable and expensive Eastern suburbs around Elizabeth Bay.

[13] The Kings Cross Tunnel sits at the eastern end of William Street extending the carriageway to Rushcutters Bay.

The cut and cover tunnel was constructed as part of the Eastern Suburbs railway line and required the resumption and demolition of 118 properties.

[14] In November 1987, a tunnel opened beneath William Street to carry traffic coming off the Cahill Expressway towards Taylor Square, as part of the Stage 1 of the Eastern Distributor.