The first Downtown Christmas Parade occurred in December 1982 and was organized by the Pensacola Jaycees. This parade had eleven entries and no bands.

In 1988, the Pensacola Jaycees were not able to provide the manpower to organize the parade. Pensacola Christmas Projects, Inc. was formed as a non-profit organization with the primary purpose of producing a family-oriented Christmas Parade in downtown Pensacola for the metropolitan area.

Today the Pensacola Christmas Parade has grown to over 100 entries, including more than 50 floats. It is the only area parade to have all eight local school bands, as well as marching/music groups from as far away as New Orleans. The parade annually pays tribute to the Navy's Blue Angels, who, along with their families, enjoy the adoration of the huge crowd.