In biblical times, the land where Hutzot Hayotzer is located was part of the valley referred to in Biblical Hebrew as Gei ben-Hinnom or Gei ben-Hinnom, which later evolved into "Gehenna", an area used for worship rituals. In today's terms, it is placed within the north-south stretch of the Valley of Hinnom.
Construction on the artists' colony began in 1969. In 2011, the artists' collective was threatened with eviction by the East Jerusalem Development Corporation, which owns the buildings. The eviction order was rescinded, but rents were raised.[3]
Since 1976, Hutzot Hayotzer and the Sultan's Pool area have been the site of the annual International Arts and Crafts Fair or Festival, a 12-day event in August featuring the work of local and international artists. There are also open-air concerts, workshops for children and food booths.[5] Many of Israel's leading pop and rock stars have performed at Hutzot Hayotzer [6] During the festival, the artist studios along the lane stay open late and the artists offer public demonstrations of their work.[3]