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The number of Jews living in Jaffa rose considerably towards the end of the 19th century and the congested living conditions spurred some of them to initiate an organization which would undertake the construction of a new neighbourhood beyond the walls of the Old City. In 1886, two merchants from Jaffa, the brothers Simon and Eliezer Rokah, founded a company which they called Ezrat Israel (Aid for Israel) for the express purpose of improving the life of the Jewish residents by establishing institutions such as a hospital and library. Forty-eight members of Ezrat Israel formed a group known as the Neve Tzedek (Dwelling-Place of Justice) Company for the Construction of Houses in Jaffa and set about planning the new neighbourhood.
A prominent member of the Sephardi community in Jaffa, Aharon Chelouche, who owned land nearby, offered Simon Rokah the opportunity to purchase ten dunams for a reasonable price. This land was then parcellated into 48 plots of 150 square meters each and the construction of the first ten houses began. Despite numerous difficulties and setbacks, this first stage was completed by the summer of 1887 and soon after that the rest of the houses were built.
The new neighbourhood, named Neve Tzedek, was laid out in three long rows with each house joined to the next for reasons of security. Each family had two rooms totalling 34 square metres, with a front yard for the kitchen and privy. Two wells were dug in the centre of the neighborhood to assure the water supply and there were three synagogues for the residents, alongside each other. Compared to the Old City of Jaffa, this new neighbourhood was considered very pleasant and people described the new houses as veritably "Parisian".
Simon Rokah headed the neighborhood committee and wealthy residents of Jaffa, such as Aharon Chelouche and Haim Amzalak, built spacious mansions close by. The new neighbourhood soon became the centre of Jewish life in Jaffa – cultural, educational and political – and paved the way for further neighborhoods developed later on The largest of these was called Neve Shalom (Dwelling-Place of Peace) and was initiated in 1890 by Zerah Barnett who belonged to Hovevei Zion and was also among the founders of Petah Tikva.
During the Second Aliyah (1904-1918) – large-scale Jewish immigration from Russia in the wake of pogroms – Neve Tzedek and the other new neighborhoods nearby became a magnet for writers and intellectuals such as S. Ben Zion, Shay Agnon, Yosef Ahronovich, Dvora Baron and Yosef Haim Brenner, for journals such as "Ha-Omer" (Sheaf) and "Hapoel Hatza'ir (Young Worker), and for the modern Hebrew schools such as Hovevei Zion's School for Girls and the Alliance's School for Boys which were established there. In 1904 the rabbi of Jaffa, Rav Kook, came to live in Neve Tzedek and under him Torah education flourished.
As time passed and particularly after the founding of the more spacious neighborhood of Ahuzat Bayit – which preceded Tel Aviv – Neve Tzedek began to decline. Gradually the more affluent residents abandoned it for the new city and neglect set in. The border with hostile Jaffa contributed to its abandonment and it soon became a deprived area. The long period of neglect continued right up to the 1970s when the beginnings of the commercial City of Tel Aviv began to appear. The situation then turned around and by the early 1980s a revival of the neighbourhood was under way, gaining momentum in the 90s with intensive renovations and the construction of the Suzanne Dellal Center for Dance and Theatre on the site of the earlier school buildings. Neve Tzedek is now a major tourist and entertainment attraction in Tel Aviv.
