The entire territory was undeveloped throughout the 18th century. The land was initially used as hunting grounds for the Empress Anna Ioannovna, then as the site of a garden maze created by Francesco Bartolomeo Rastrelli, and lastly for greenhouses of the third Summer Garden. At the beginning of the 19th century, the area was cleared to build a palace for the Grand Duke Mikhail Pavlovich. The architect Carlo Rossi was commissioned to create a plan to transform the whole area from Nevsky Prospekt to the Field of Mars. The most prominent feature of the new architectural ensemble was the magnificent Mikhailovsky Palace, better known today as the State Russian Museum.

In front of the palace Rossi built Mikhailovskaya Ploshchad which was linked to Nevsky Prospekt by Mikhailovskaya Ulitsa. Rossi personally designed all the facades of the buildings facing the square from Italianskaya Ulitsa and Mikhailovskaya Ulitsa. The buildings were completed by other architects, mostly in the 1830s, including the Maly Theatre of Opera and Ballet (now the Mikhailovsky Theatre), the Golenishcheva-Kutuzova House, the Jaquot House, and the Assembly of the Nobility (now the Shostakovich St. Petersburg Academic Philharmonia). In the middle of the square a park was laid out with flowerbeds and lawns.

A new page in the life of the area was written in 1898, when the Russian Museum of Emperor Alexander III in the Mikhailovsky Palace was opened to the public. Coordinated by architect Vasiliy Svinin, considerable changes were made to the interiors of the Mikhailovsky Palace. In place of its eastern wings, Svinin constructed the Ethnographic Museum. Now the square could certainly be viewed as "a square of two museums."

In the 1910s, an elaborate statue of Emperor Alexander II riding a chariot was to be erected in the center of the square. However, the First World War prevented this plan. In 1957, the center of the square became the site of the Pushkin monument created by the architect Mikhail Anikushin. As a side note, the square was only named Arts Square in 1940. From 1918-1940 it bore the name of the German socialist Ferdinand Lassalle.

Since 2000, the Shostakovich St. Petersburg Academic Philharmonia in cooperation with the State Russian Museum, the Grand Hotel Europe, the Mikhailovsky Theatre, and the Theatre of Musical Comedy annually holds the Arts Square winter festival every December and January where leading Russian and foreign classical musicians perform.