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Dam Square, or ‘The Dam’, derives its name from its original function: a dam on the Amstel River, hence also the name of the city. Built in approximately 1270, the dam formed the first connection between the settlements on the sides of the river.
As the dam was gradually built up it became wide enough for a town square, which remained the core of the town developing around it. Dam Square as it exists today grew out of what was originally two squares: the actual dam, called Middeldam; and Plaetse, on the westside. A large fish market arose where ships moored at the dam to load and unload goods. The area became a center not only of commercial activity but also of the government, as the site of Amsterdam's town hall.

As a market square, the Dam had a weigh house that can be seen in some old paintings. It was demolished in 1808 by order of Louis Bonaparte who, upon taking up residence in the newly converted Royal Palace, complained that his view was obstructed.

The Damrak, or the former mouth of the Amstel River, was partially filled in the 19th century; since then, the Dam square has been surrounded by land on all sides. The new land made room for the Beurs van Zocher, a stock exchange that was built in 1837. After the stock trade moved to the Beurs van Berlage in 1903, the Zocher building was demolished. In its place, De Bijenkorf department store has stood since 1914.

In the time of the horse tram at the end of the 19th century the Dam was the most important tram hub of Amsterdam. After 1900 this function moved to the Stationsplein (Station Square).

Over the course of the 19th and 20th centuries, Amsterdam's main square became a "national" square well-known to nearly everyone in the Netherlands. It has frequently been the location of demonstrations and events of all kinds, and a meeting place for many people. On May 4 every year, the Dutch celebrate National Memorial Day, in observance of the National Monument, that was set up in 1956.

Several times a year, such as on Queens Day or near Christmas, there is a big funfair on Dam Square.

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