The land that is now the Arts District has a history that predates Los Angeles itself. Spanish explorer Juan Crespi noted the area during an 1769 expedition, writing that a town built near the water-bordered soil might serve well. Jean-Louis Vignes, a French vintner who arrived in 1831, planted some of the first grapevines in the region along what is now Vignes Street. By the early 20th century, the neighborhood had become thoroughly industrial, defined by the smell of soap, dairy, and machinery. Alameda Street formed its western edge; the Los Angeles River, at that point fully encased in concrete, formed the east.

The modern Arts District begins in 1969, when artist Allen Ruppersberg opened Al's Cafe at 1913 West Sixth Street — a proto-installation that blurred the line between art and daily life. By the mid-1970s, a core group of artists including Joel Bass, Dan Citron, Woods Davy, and others had established studios in the empty industrial buildings, sometimes renting space from landowners who were simply glad to have anyone paying anything. The community grew quickly: by the mid-1980s, artists including Paul McCarthy, Lari Pittman, and George Herms had made the district their home. LA Artcore, founded in 1976, gave the community a formal gallery space.

The Atomic Cafe on 1st Street became an artist and musician haunt in the late 1970s and early 1980s. Around 1980, Jon Peterson and Stephen Seemayer opened a club called DTLA — a name the neighborhood would later adopt more broadly — that hosted exactly one show before closing, adjacent to the Atomic Cafe. A coffee house that later occupied the space was where Beck reportedly got his start. The 1981 Artist in Residence ordinance from the city of Los Angeles legitimized what artists were already doing: living and working in buildings zoned for industrial use. The ordinance made the Arts District's creative community official, at least in the eyes of city planning.

The Arts District's built environment reflects its industrial origins. The Los Angeles Conservancy has recognized several landmarks: the Pickle Works building at 1001 East 1st Street, the Challenge Dairy Building, the Southern California Supply Co. building, and the Toy Factory Lofts and Biscuit Company Lofts on Industrial Street. The Southern California Institute of Architecture (SCI-Arc), one of the most prestigious architecture schools in the country, is based at 960 East 3rd Street. Cirrus Editions, the first gallery to open in the downtown area, has remained through every wave of change.

The Arts District's transformation into a desirable neighborhood has been, in the particular irony that attends most arts districts, driven by the very artistic identity it now threatens. Upscale restaurants, boutique hotels, and tech offices have moved into buildings that once held studios. The One Santa Fe apartment complex added density along the riverfront. The former Coca-Cola building was converted to premium office space. Community leaders are now attempting to preserve space for working artists in a neighborhood where the average income has climbed to levels that make three-cents-per-square-foot rent a historical footnote rather than a present option.