During the Middle Ages the square was very busy due to its location between the two main gates of the city. Three streets go out of the square: Codo (elbow), Cordon, and Madrid streets. At this time the square was known as Saint Salvador, taken from the church of the same name that was located there. It was here on the front steps were where city hall sessions took place. During the XV century the square changed its name after King Enrique IV gave Madrid the category of city (Villa).
The square is surrounded by three main buildings of great historical value: La Casa de la Villa, La Casa y Torre de los Lujanes, and La casa de Cisneros.
La casa de la Villa
The construction of La Casa de La Villa was started in 1645 and was finished fifty years later, although the Tuscan style columns that enhance the facade are from 1879. The building was the official City Hall site from 1693 until 2007, when it was moved to the Communication Palace at Cibeles Square. Now it is used simply for sessions of the municipal government.
La Torre de los Lujanes
Dating to the XV century, the house and the tower are the oldest non-religious buildings in Madrid. A mix of Gothic and Moorish styles, it was the house of the family of the same name. The coat of arms of the family is still on the facade.
The French King Francisco I was held in the tower after being taken prisoner at the battle of Pavía just outside Paris, until a ransom was paid for his release.
It is currently used as the official site of the Political and Ethical Science Academy.
La casa de Cisneros
Constructed in 1537, it takes its name from Cardinal Cisneros' nephew. The principal facade that faced Sacramento Street is still almost the same as it was originally. The facade that faces Villa Square, however, was entirely restored preserving the original style.
The house has bore witness to some important moments in Spanish history: It was the jail for Antonio Pérez, the prime minister of King Philip II; it was where monarchic politician Conde de Romanones was born and Major General Narvaez died.