The whole square originally stretched from the "Landgraben" (originally an open drainage canal) and over "Erbprinzenstraße" and on as far "Kriegsstraße". In 1800, the garden, which belonged to a small stately home of the Hereditary Prince Karl Ludwig and his wife Amalie, was laid out in the style of English landscape gardening. At that time, Erbprinzenstraße, a public thoroughfare that divided the garden into two parts, was given two descending passages designed to look like grottos, which linked the two halves underground. After the premature death of the heir to the throne, the margravine had a memorial to her deceased husband built at the southern end of the garden and a building of her own on "Ritterstraße".

As the margraves and later grand dukes of Baden had accumulated a wide variety of collections of coins, weapons, minerals, natural artefacts, antiquities, and books over the centuries, an extension of the court library and scientific collections was planned in the second half of the 19th century. The architect Karl Josef Berckmüller was commissioned to plan a new building and design the layout of the square. The square was enclosed with a new building to house the collections and today's Natural History Museum in the Renaissance style in the southern section of the garden, and private houses on the northern and eastern flanks. The buildings for businessmen and manufacturers were connected on the ground floor, intended for trade purposes, by a uniform arcade.

Most of the buildings were destroyed in WWII. The square became one of the collection depots for rubble until the rows of buildings began to be rebuilt in the 1950s.

Today the square is frequently used for events. The largest open-air ice rink in Germany is set up here in winter, attracting many thousands of skaters. Every two years at the end of summer, Friedrichsplatz becomes the venue for the "Folkloria", a big international dance and folklore festival.