SR 161 was established during the 1964 highway renumbering, replacing three Secondary State Highways (SSHs): Secondary State Highway 5D (SSH 5D) and SSH 5G, both established in 1937, and SSH 5N, established in 1955. SSH 5D served as a connector between Federal Way and Puyallup and SSH 5G served as a connector between Puyallup and South Hill. SSH 5N connected Eatonville to South Hill and was extended south towards La Grande in 1967. SR 161 was moved onto a bypass of Puyallup in the 1980s and formed concurrencies with SR 167 and SR 512 as a result. , projects to expand the highway in Edgewood and Milton and adding new offramps at the I-5 and SR 18 interchange are in progress.