When the station first appeared in Hong Kong Mass Transit: Further Studies in 1970, it was simply known as Kennedy (Chinese: 堅尼地). It was to be built as part of the Island Line in the 1980s, but construction of the line did not commence westwards beyond Sheung Wan, citing inadequate passengers and technical difficulties by contractors.
Under the latest proposal as of June 2005, Kennedy Town would be served by West Island Line as an extension of the Island Line, a heavy rail system, instead of being served by a medium capacity rail shared by commuters from Southern District, after pressure from local community groups.
The MTR Corporation let out a tender for the construction of the Kennedy Town Station and overrun tunnel. It was awarded to Gammon Construction, (half owned by Balfour Beatty) for 1.3 billion HK dollars. The tunnel is 650 meters in length. Travel time from this station to Sheung Wan is expected to be eight minutes. Construction commenced in 2010 and is expected to be complete by 2014. As at February 2011 excavation work has commenced at each station entrance and demolition of the swimming pool has started. The re-provisioning of the Kennedy Town Swimming Pool was awarded as a contract to Paul Y. Construction Company Ltd in July 2009 and was finished in 2011.