San Jose's first Chinese community took root near the corner of Market and San Fernando Streets in the 1860s, close to what is now the Circle of Palms Plaza. Most residents were seasonal laborers who worked the orchards of the Santa Clara Valley. City officials noted the Chinese presence by 1866, and by January 1870, white residents were petitioning the city council to do something about the growing neighborhood. Weeks later, Chinatown burned to the ground. The San Jose Fire Department did little to save it. The pattern that would repeat seventeen years later -- fire, official indifference, displaced families -- was established in its first iteration.

The community refused to disappear. In March 1870, a wealthy Chinese businessman from San Francisco secured a ten-year lease on the original Chinatown land, and merchants began rebuilding. A competing settlement sprang up on Vine Street near the Guadalupe River but was abandoned after severe flooding in 1871 and 1872 drove its residents back to Market Street. By 1876, the second Market Street Chinatown had grown to roughly 1,400 people. It occupied most of the block between San Fernando and San Antonio Streets, served by three restaurants, a theater, and a joss house. The northern buildings were constructed of fireproof brick. The community even organized its own volunteer fire brigade -- a necessity born of a city ordinance that excluded the neighborhood from the municipal fire district.

White San Jose tolerated the Chinatown at first because it sat in the older, less commercially valuable Spanish quarter. But as the business district expanded southward along First Street, merchants began viewing the Chinese neighborhood as an obstacle. Parishioners at St. Joseph's Cathedral, directly across the street, complained of "sins and smells." In 1878, Denis Kearney arrived in San Jose, whipping crowds into anti-Chinese fervor. His Workingmen's Party championed a provision in the 1879 state constitution that briefly allowed the legislature to criminalize the employment of Chinese workers. Children were harassed when they ventured beyond the neighborhood's boundaries. On March 24, 1887, emboldened by the Supreme Court's ruling in Yick Wo v. Hopkins, the city council declared Chinatown a public nuisance and began exploring ways to legally remove the community from the city center.

Six weeks later came the fire on Ah Toy Alley. Every structure burned except the theater. Chinatown's own emergency water tanks were nearly empty, and the city's firefighters confined their efforts to protecting the surrounding white-owned properties. The day after the fire, the city council approved funding for a new San Jose City Hall on the plaza directly opposite the ruins, stipulating that no Chinese labor be used in its construction. Suspicious fires soon consumed Chinatowns in Fresno and Chico. The displaced residents of Market Street Chinatown moved temporarily to San Fernando and Vine Streets before eventually settling in the Woolen Mills Chinatown and Heinlenville, both north of the city.

For nearly a century the site lay beneath layers of urban development, its history largely forgotten. Then in 1981, archaeological testing for a redevelopment project that would include the Circle of Palms Plaza, the Fairmont Hotel, and the Silicon Valley Financial Center uncovered artifacts from the buried Chinatown. Construction proceeded anyway. After outcry from San Jose's Chinese community, salvage excavations ran alongside construction crews from 1985 to 1988, recovering objects that were then stored in a warehouse inaccessible to researchers for years. On September 28, 2021, the city of San Jose formally apologized for its role in the destruction of Market Street Chinatown. A plaque outside the Fairmont -- now the Signia by Hilton -- marks where the neighborhood once stood.