The restaurant is located in New York City's Central Park at Central Park West and West 67th Street on Manhattan's Upper West Side. It was originally the sheepfold that housed the sheep that grazed Sheep Meadow, built to a design by Calvert Vaux in 1870. It became a restaurant as part of a 1934 renovation of the park under Robert Moses, New York City's Commissioner of Parks.

On August 28, 2009, the New York City Department of Parks and Recreation announced that it had declined to renew the restaurant's license, granting it instead to Dean Poll, operator of the Central Park Boathouse. In September 2009, the restaurant filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, located in New York City, citing the 2009 national financial crisis and the August 28, 2009 loss of the restaurant's operating license. The rights to the name of the restaurant became an additional source of contention between the LeRoys and the city of New York during the bankruptcy court procedures in October 2009 after the LeRoys claimed the trademark was theirs while the city challenged them. At the time the trademark was appraised at $19 million. In November 2009, Poll registered a backup name with New York State: Tavern in the Park. The LeRoy management was required to cease operations and remove all furnishings from the location before January 1, 2010.

In 2013, Jim Caiola and David Salama re-opened Tavern on the Green with the vision of the original landmark—a warm, celebratory gathering space that captures the spirit of Central Park and the energy of New York City.