Until St Peter's Church was built in 1788, the area consisted of fields on the outskirts of the relatively small Georgian town of Manchester. The church served a population which had settled in the vicinity.
The area achieved notoriety on 16 August 1819, when at St Peter's Field, around Windmill Street and Peter Street, Henry Hunt addressed a meeting of 60,000 people to demand radical reform of the House of Commons. The size of the crowd so alarmed the City Magistrates that troops were called in to disperse it. Eighteen people were reported killed and 700 injured in the resulting chaos. The incident is now remembered as the 'Peterloo Massacre.'
Towards the end of the 19th century, the area assumed a more commercial character and the resident population declined to a point where St Peter's Church had no congregation and was finally demolished in 1907. The site was marked shortly after by the erection of a memorial cross designed by Temple Moore and later by the enclosure of a small, formal garden in a scheme by Sir Edwin Lutyens in 1924, to honour the fallen in the First World War. The design, in Portland stone, includes the cenotaph, a sarcophagus, a pair of obelisks and a stone wall surround with seating enclosing the garden.
The road around the Square, encompassing the island site, has remained largely unchanged since 1788.
The Square itself was created in 1907. It rapidly became dominated by large buildings as the old houses and converted commercial premises were demolished. First was the Midland Hotel, built 1898-1903, followed by the YMCA along Peter Street in 1909, the Central Library in 1934, the Town Hall Extension in 1938 and finally the buildings on the south-east side of the Square in the 1960s and 1970s.
The most significant recent change in the area is the construction of the Metrolink tram system, which was officially opened by the Queen in June 1992 at the station which stands in the centre of the Square.