The Jewish quarter was formed in the Old Town. According to 1784 census there were around 5000 Jews in Vilnius at that time; according to 1897 census Jews constituted 38.8% of town's population (64,000 Jews). After WWI their number somewhat decreased, in 1923 55,000 Jews lived here (33.3% of town's population), and on the eve of WWII, in 1939, Jews made up 27.9% of town's population which was around 60.000 people.
Stripped of the right to construct buildings, Jews set up a synagogue in the palace of Duke Slushka; later the famous Great Synagogue of Vilnius was built. Religious thought began developing very intensively. Forty prominent rabbis lived in Vilnius in the second half of 17th century, although there were only 2500 Jews here at that time. And in 18th century the great genius Gaon of Vilna emerged. Since then Vilnius became a recognized spiritual center. It was called Jerusalem of Lithuania.
In order to pacify the predominantly poorer Jewish quarter in the Vilnius Old Town and force the rest of the more affluent Jewish residents into the new German-envisioned ghetto, the Nazis staged – as a pretext – the so-called Great Provocation incident. On 6 September and 7 September 1941, the Nazis herded the remaining 20,000 Jews into the parameters of two ghettos by evicting them from their homes, during which 3,700 were killed. The area designated for the ghetto was the old Jewish quarter in the centre of the city.