Golden Gai was known for prostitution before 1958, when prostitution became illegal. Since then it has developed as a drinking area, and at least some of the bars can trace their origins back to the 1960s. In the 1980s, many buildings in Tokyo were set on fire by yakuza, so the land could be bought up by developers, but Golden Gai survived because some of its supporters took turns guarding the area at night.

Bars in Golden Gai are known in particular for the artistic affinities of their patrons. Golden Gai is well known as a meeting place for musicians, artists, directors, writers, academics and actors, including many celebrities.[2] Many of the bars only welcome regular customers, who initially should be introduced by an existing patron, although many others welcome non-regulars, some even making efforts to attract overseas tourists by displaying signs and price lists in English.[6] Some bartenders are foreign.[7]

Many of the bars have a particular theme, such as jazz, R&B, karaoke, punk rock, or flamenco,[2] and their ramshackle walls are sometimes liberally plastered with movie, film and concert posters. Others cater to customers with a particular interest, such as go, exploitation films, or horse racing.[2] Most of the bars don't open until 9:00 or 10:00 p.m., so the area is very quiet during the day and early evening.[6]

Its architectural importance is that it provides a view into the relatively recent past of Tokyo, when large parts of the city resembled present-day Golden Gai, particularly in terms of the extremely narrow lanes and the tiny two-story buildings. This has left Golden Gai as one of a decreasing number of examples of the nature of Tokyo before Japan's "economic miracle", that took place in the latter half of the 20th century.