Route 54 was first numbered in two segments in Wicomico County, Maryland in the late 1930s. MD 467 was assigned to the segment around Mardela Springs while MD 455 was assigned to the state line road near Delmar. The Delaware portions of the highway remained unnumbered until the late 1960s, when DelDOT briefly assigned DE 32 to the highway along the southern edge of Sussex County before designating it DE 54. The Maryland State Roads Commission (now MDSHA) immediately reciprocated by designating its portions MD 54. Route 54 east of Selbyville has become an important route for seasonal beach traffic headed to and from Fenwick Island and Ocean City, with suburban development lining the road between DE 20 and the eastern terminus. DelDOT has signed DE 54 Alternate (DE 54 Alt.) as an alternate route to the beaches. Improvements have been made to the route west of Fenwick Island, including building a causeway to reduce flooding and adding a center left-turn lane.