This street, created in 1888 as part of the First Plat of West Seattle by the West Seattle Land and Improvement Company, was originally named Grand Avenue. It was renamed, along with many other West Seattle streets, in 1907, when West Seattle was annexed by Seattle. The name was a reference to the WSL&IC ferry terminal at what is today Harbor Avenue SW at California Way SW. The West Seattle Water Taxi has been operating from the same location since 1997.

Today, Ferry Avenue SW begins at California Way SW and goes about ³⁄₇ of a mile southwest to just past California Avenue SW, at California Place park (built on the site of a former streetcar terminal; before that, a cable car ran up the Ferry Avenue right-of-way from Elliott Bay to this location). It resumes on the other side of the park at SW Hill Street and goes a further 600 feet southwest to SW Walker Street.

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