The creation of the Liepāja ghetto began in May 1942 by order of the SD chief Wolfgang Kugler. This was eight months later than in Riga and Daugavpils, because Liepaja did not have a specific Jewish area that could serve as a base for the ghetto. In order to concentrate Jews in one area, the German leadership decided to commandeer 13 residential buildings and outbuildings. They facedproblems carrying out this process because of the lack of housing due to the war and the difficulties in resettling the residents of the houses of this district. The borders of the ghetto were drawn along Dārza, Apšu, Kungu and Bāriņu streets.
A hand-drawn plan by a survivor of the Liepāja ghetto, Solomon Feigerson, has survived. The sketch shows in detail the areas for living and other purposes.
Six months before the creation of the ghetto, a local Jewish council of elders, the altestenrat (hereinafter the Judenrat), was created. It was headed by Solomon Israelit, a merchant and public figure in Liepāja, and a lawyer,Menachem Kagansky.
On 1st July 1942, the Jews who remained in the city – about 800 men, women, children and the elderly, were ordered to move to the ghetto within ten days(different sources give slightly different numbers). Jews were forbidden to leave the ghetto without permission, and residents of the city were not allowed to enter it or maintain contact with prisoners. Warnings were posted on the fence, threatening that anyone who broke the rules would be shot. Some Jewish women who had married non-Jews had had to undergo sterilization in order to continue living with their husbands outside the ghetto, but over time they were also driven into the ghetto. Other mixed couples, broke up even before the ghetto was created, with the spouse who was Jewish sharing the fate of other Jews.