The road starts in the west at the intersection with Lai Cheung Road and Ferry Street, and runs east past Nathan Road. It then runs on a northeast-southwest alignment through the eastern part of Yau Ma Tei and Mong Kok until the intersection with Princess Margaret Road. The road then takes another turn and runs north through Kowloon Tong, leading towards the Lion Rock Tunnel.
Waterloo Road was laid out in the early 20th century. The stretch of the road through Kowloon Tong was built in 1922 as part of the plans to develop the area. This portion of the road was designated as part of Hong Kong's Route 1 in 1974, and is the only part of Route 1 which features several intersections without grade separation.