Once a part of the sparsely populated outskirts of northern Miami, what became Liberty City developed during the Great Depression of the 1930s when President Franklin D. Roosevelt authorized the construction of the Liberty Square housing project in 1933, the first of its kind in the Southern United States. Built as a response to the deteriorating housing conditions in densely populated and covenant-restricted slums of Overtown, construction on the initial housing project began in 1934 and opened in 1937.
Into the 1940s and 1950s, the growing Liberty City and adjacent Brownsville thrived as a middle income black American community, hosting several churches, hospitals, and community centers. The area served as home to prominent figures such as Kelsey Pharr, M. Athalie Range (the first black American elected to serve on the Miami city commission) and boxer Muhammad Ali. Although segregation laws prohibited black Americans from resting and residing in popular Miami Beach, service establishment and resorts such as the Hampton House Motel and Villas catered to and entertained the likes of notables such as Rev. Dr. Martin Luther King, Jr., Althea Gibson, and even whites such as Mickey Mantle.
Construction of Interstate 95 in Florida in Overtown and declining use of restrictive covenants in the wake of the Civil Rights Act of 1964 dramatically altered the neighborhood into the 1960s. Increasing numbers of lower income elderly and welfare-dependent families migrated to the Liberty City neighborhood following their displacement primarily from inner city Overtown, leading to large-scale black flight of middle and higher income blacks and other blacks like West Indian Americans largely to suburban areas like Florida City and Miami Gardens in southern and northern Dade County, respectively.