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The New York Times publisher Adolph S. Ochs moved the paper's operations to a new tower on 42nd Street in the middle of the area known as Longacre Square. Ochs persuaded Mayor George B. McClellan, Jr. to build a subway station there and rename it Times Square. On April 8, 1904, officiated by Mayor McClellan, it was renamed. Just three weeks later, the first advertisement appeared on the side of a bank at the corner of 46th Street and Broadway.

The Times moved out of the tower in 1913, although it remains in the neighborhood. Later known as the Allied Chemical Building and now known as One Times Square , the tower is the site of the annual New Year's Eve ball drop. On December 31, 1907, a ball signifying New Year's Day was first dropped at Times Square, and the Square has held the main New Year's celebration in New York City since. On this night hundreds of thousands of people congregate to watch the Waterford crystal ball being lowered on a pole atop the building (though not to the street, as is a common misconception), marking the new year. It replaced a lavish fireworks display from the top of the building that was held from 1904 to 1906, but was outlawed by city officials. During World War II, a minute of silence, followed by a recording of church bells pealing, replaced the ball drop because of wartime blackout restrictions.

Looking towards Times Square towers.In 1972, entertainer Dick Clark began hosting a live half-hour ABC special detailing the event entitled Dick Clark's New Year's Rockin Eve, which not only aired the descent of the ball, but also performances from popular bands and commentary from various hosts in other cities, notably Las Vegas, Los Angeles, and Orlando. During the millennium celebrations in 1999, Peter Jennings based ABC's operations in Times Square, hosting ABC 2000 Today.

On average, approximately 750,000 revelers crowd Times Square for the New Year's Eve celebrations. However, for the millennium celebration on December 31, 1999, published reports stated approximately 2 million people overflowed Times Square, flowing from 6th Avenue to 8th Avenue and all the way back on Broadway and Seventh Avenues to 59th Street, making it the largest gathering in Times Square since August 1945 during celebrations marking the end of World War II.

Times Square quickly grew as a cultural hub full of theaters, music halls, and fancy hotels. "Times Square quickly became New York's agora, a place to gather both to await great tidings and to celebrate them, whether a World Series or a presidential election," writes James Traub in The Devil's Playground: A Century of Pleasure and Profit in Times Square. Names such as Irving Berlin, Fred Astaire, and Charlie Chaplin were closely associated with Times Square in the 1910s and 1920s.

NYPD kiosk at Times Square The atmosphere changed with the onset of the Great Depression during the 1930s. Times Square became a neighborhood full of "peep shows", erotic all-night movie houses, and stores selling cheap tourist merchandise. The change is captured in Damon Runyon's stories, including his collection Guys and Dolls. In the decades afterwards, it was considered a dangerous neighborhood. The seediness of Times Square was a famous symbol of New York City's danger and corruption from the 1960s until the early 1990s. Influential and dark films such as Midnight Cowboy and Taxi Driver had many scenes in Times Square, while its grindhouse cinemas routinely showed sleazy films.

In the 1980s, a commercial building boom began in the West 40s and 50s as part of a long-term development plan conceived under Mayors Ed Koch and David Dinkins. Then, in the mid-1990s, Mayor Rudolph Giuliani (1994–2002), led an intense effort to "clean up" the area, including closing sex shops, increasing security, driving out the "squeegee men" and opening more tourist-friendly attractions. The process began when the local government issued an injunction against the tight clustering of the porn shops in the 42nd Street area. Many of the sex shops closed or moved to industrial areas in Brooklyn or Queens. More up-scale establishments have opened. Advocates of the remodeling claim that the neighborhood is safer and cleaner. Detractors, on the other hand, argue that the changes have diluted the character of Times Square and have unfairly targeted lower income New Yorkers from nearby neighborhoods (such as Hell's Kitchen).

In 1990, the State of New York took possession of six of the nine historic theatres on 42nd Street. The New 42nd Street nonprofit organization was appointed to oversee their restoration and care. The theatres were variously renovated for Broadway shows, converted for commercial purposes, or demolished.

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