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Sherwood Park was one of seven neighborhood playgrounds created by Chicago's Special Park Commission in 1914. Located across the street from Sherwood School in the densely-populated Englewood community, the playground initially included only an athletic field that was flooded in winter for ice skating. Between 1923 and 1935, the City acquired adjacent property, more than tripling the park's size. By 1935, the enlarged park included a playing field, a baseball diamond, a sand box, and a shelter house. The City of Chicago transferred Sherwood Park to the ¿ì²¥ÊÓƵ pursuant to the Chicago Park and City Exchange of Functions Act of 1957. Having constructed an above-ground swimming pool and a fieldhouse around 1970, the Park District expanded the park slightly in 1976 and again in 1997.  The Park District expanded the park again with land acquisitions from the City and the Corporation for Open Lands in 2000 and 2001.  The final expansion was in 2003, with the closure of a portion of S. Shields Avenue.

Both the park and the adjacent school honor early Englewood resident Jesse Sherwood. A native of Delaware, Sherwood moved west to Missouri at 15, and joined the U.S. Navy at 18. After fighting in the Civil War, he relocated to Edina, Minnesota, where he served on the Board of Education. In 1870, Sherwood settled in Englewood, ran a business in the Union Stock Yards, and served three years on the Chicago Board of Education. He was also a one-time president of the National Live Stock Commission.