By 1910, the Chinese population in Toronto numbered over one thousand. Hundreds of Chinese-owned businesses had developed, comprised mainly of restaurants, grocery stores and hand laundries. By the 1930s, Chinatown was a firmly established and well-defined community that extended along Bay Street between Dundas Street and Queen Street. Like the rest of the country, Chinatown suffered a severe downturn in the Great Depression, with the closing of more than 116 hand laundries and hundreds of other businesses. The community began to recover after World War II as Canada's general economic fortunes improved. The Chinese population greatly increased between 1947 and 1960, as students and skilled workers arrived from Hong Kong, Guangdong and Chinese communities in Southeast Asia and the West Indies.
When plans emerged in the late 1950s to construct the new Toronto City Hall at the intersection of Queens Street and Bay Street, it became clear that most of Chinatown would be displaced by the project. As Chinese businesses began to relocate, some stores were taken over by other developers, and most stores that occupied the project site were cleared through expropriation. Construction on City Hall and Nathan Phillips Square began in 1961. The Chinese community migrated westward to Chinatown's current location along Spadina Avenue, although a handful of Chinese businesses still remain around Bay and Dundas.
Since the 1990s, Chinatown has been struggling to redefine itself in the face of an aging Chinese population and the declining number of tourists visiting the enclave. As the aging population shrank, revenues of businesses in the neighbourhood also decreased. While the majority of the grocery stores and shops remain, most of the once-famed restaurants on Dundas, especially the barbecue shops located below grade, have closed since 2000.
Competition from commercial developments in suburban Chinese communities also drew wealth and professional immigrants away from downtown. Unlike those newer developments in the suburbs, Chinatown's economy relies heavily on tourism and Chinese seniors. As many of the younger, higher-income immigrants settled elsewhere in the city, those left in the district are typically from older generations who depend on downtown's dense concentration of services and accessibility to public transportation. Ethnic Chinese from Vietnam are now the faces of old Chinatown Toronto and turning some parts into Little Saigon.
In the 2000s, downtown neighbourhoods became more attractive to urban professionals and young people who work in the Financial District, leading to the gentrification of surrounding areas and potentially changing the face of old Chinatown.
Recently, an influx of students mainly from the adjacent Ontario College of Art and Design, as well as some from Ryerson University and the University of Toronto, arrived in search for affordable housing and accelerated the gentrification of the district. The area has also seen a surge in Latin American immigrants. The changes bring a more multicultural flavour to the district, but may gradually reduce or eliminate its identity as Chinatown.
A number of streets in Chinatown are bilingual, a feature first introduced in the 1970s.
As property values increased in downtown Chinatown, many Chinese Canadians migrated to Toronto's east end in Riverdale. A second, somewhat smaller, Chinese community was formed, centred on Gerrard Street East between Broadview Avenue and Carlaw Avenue. Chinese-Vietnamese and mainland Chinese immigrants dominate this district. East Chinatown, though, is somewhat smaller than Toronto's main Chinatown, but is growing. The main part of East Chinatown is located between Broadview Avenue, and Carlaw Avenue, on Gerrard Street. At the north-most corner of East Chinatown (NW corner, Broadview & Gerrard Street), there is the Riverdale branch of the Toronto Public Library. This branch is quite bilingual in Chinese and English. East Chinatown can be accessed by taking the 504 King, the 505 Dundas, or the 506 Carlton Toronto Transit Commission (TTC) streetcars.
The television series Kung Fu: The Legend Continues was filmed in Chinatown at Spadina and Dundas for many episodes of its 1993-1997 run. Filmed in Toronto, it portrays the Chinatown of an unidentified major U.S. city.
Toronto's Chinatown is featured prominently in the 2008 collection of short stories The Chinese Knot and Other Stories by Lien Chao.