Covent Garden was developed as a commercial enterprise in 1631 by Francis Russell, the 4th Earl of Bedford, on land that had been confiscated from the abbey of St. Peter at Westminster at the time of the dissolution of the monasteries. (The name is, of course, a corruption of "convent"; the piazza was built upon the site of the old convent gardens).

Intended as the centrepiece for a fashionable and upscale residential neighbourhood, Bedford employed the foremost architect of his day for its layout and design. Inigo Jones modelled the central square upon the Italian piazza; its colonnaded design exhibits most obviously the influence of the Italian architect Palladio. Jones surrounded the square itself with arcades on two sides; at the west end sits his Tuscan-style St. Paul's Church. In the streets immediately adjoining the square Bedford had a number of graceful – and expensive – residential buildings constructed; to service this new community, he issued licences for a fruit and vegetable market, to be held in the centre of square. The entire development, as originally laid out, covered approximately 40 acres.

As intended, the new area rapidly attracted further development, both in the form of new residential areas associated with Bedford's development, and in the numerous high-end shops, coffee-houses, and taverns that were soon opening near the square. By the Restoration, Covent Garden was no longer on the periphery of London development, as it had been when first constructed, but it was still, by and large, an expensive area in which to live and shop. It is not coincidental that the first theatres to built in the Restoration located themselves near Covent Garden: quite aside from the area's convenience to both Court and City, the area itself could boast a fair share of the fashionable, theatre-going members of the public. Covent Garden represented, in fact, a kind of centre-of-gravity for the "Town" and the Restoration beau monde.

John Strype noted in 1700 that the area was "well inhabited by a mixture of nobility, gentry and wealthy tradesmen . . . scarce admitting of any poor, not being pestered with mean courts and alleys"; yet, by Strype's time, the area was already undergoing a slow and painful transition. Ned Ward's London Spy, published 1698-99, identifies the square – and St. Paul's Church in particular – as a convenient rendezvous for married men and women making assignations with lovers. More to the point, however, the fruit and vegetable market established by Bedford had begun to affect the area somewhat, attracting a crowd of increasingly less fashionable patrons. By the mid-eighteenth century, the Covent Garden area had become run-down, and was better known for its prostitutes than for its fops. The magistrate Sir John Fielding (brother of the novelist) lived in the area himself in the mid-eighteenth century, and commented that "one would imagine that all the prostitutes in the kingdom had picked upon the rendezvous."

Covent Garden served as the hub of fashionable London for most of the Restoration, and its importance did not entirely diminish in the eighteenth-century, as it remained near the heart of the theatre district. Its design, construction, and management are also noteworthy in that they represented a radical departure from Tudor practice. In particular, the use of a communal square or piazza as the centrepiece for a new residential development, and the employment of uniformly designed facades for expensive row houses, anticipate common eighteenth-century practice. So too did the financing of the development by Bedford: most of London's expensive new residential developments would, in the eighteenth-century, be conceived as lucrative investments under the control of aristocratic landowners.