The Department of Neighborhoods was created in 1991 by consolidating staff from the Executive Department's Citizens Service Bureau and Office of Neighborhoods, the Community Service Centers of the Department of Human Resources, and the Neighborhood Assistance Division of the Department of Community Development. The Office of Urban Conservation, the City's historic preservation agency, was added in 1992. The following year, the department added a community development function by taking over projects in the Central Area, Southeast Seattle, and the Port of Seattle. In 1999, the Neighborhood Planning Office was abolished and its continuing functions were assumed by the Department of Neighborhoods. The Department's mission is to bring local government closer to the citizens by maintaining a responsive presence in Seattle neighborhoods, by responding to citizen concerns and complaints, and providing a communications link for neighborhoods on City issues that will have an impact on them. The department operates the Neighborhood Service Centers (Little City Halls), administers the Neighborhood Matching Grant Program, staffs the Landmarks Preservation Board, and manages the P-Patch program.

The Citizens Service Bureau opened in 1965 as a central location in City Hall where citizens could obtain information, request City services and resolve complaints about City policies, procedures and service delivery. The Bureau was part of the Executive Department from its creation until it moved to the newly-formed Department of Neighborhoods in 1991. In 2007 the name was changed to Customer Service Bureau.