A partner of the Los Angeles Suburban Homes Company, Gen. Moses Hazeltine Sherman, developed Sherman Oaks. The company had subdivided 1,000 acres (400 ha) of land that would become Sherman Oaks. In 1927 each acre was sold for $780. Sherman's other major venture was the Los Angeles Pacific Railroad.
In 1991, a group of homeowners living in the Chandler Estates area successfully petitioned former Los Angeles City Councilmember Zev Yaroslavsky to re-draw the boundaries of Sherman Oaks from Magnolia to Burbank Blvd to the north, and from Coldwater Canyon to Van Nuys Blvd to the west, with the goal of including their neighborhood. This request was nothing new to the San Fernando Valley; other neighborhoods had either sought to change their names, or sought to attach themselves onto more affluent neighborhoods. Residents in the area argued, however, that the area was originally part of Sherman Oaks, but was labeled Van Nuys instead through the creation of ZIP codes in 1962; some residents were able to produce a few property deeds to present their case.
Just a few weeks after the Chandler Estates area successfully seceded from Van Nuys, Magnolia Woods, a 45 block area bordered by Van Nuys Boulevard on the east and the San Diego Freeway on the west, and between Burbank and Magnolia Boulevards, also successfully petitioned Los Angeles City council member Marvin Braude to secede from Van Nuys and join Sherman Oaks. Petitioners in the area argued that their neighborhood was also part of Sherman Oaks, though they were only able to produce 22 deeds showing so. As a result of this change, Van Nuys Middle School became separated from its namesake neighborhood.
Finally, in 2009, the Los Angeles City council voted to redraw neighborhood boundaries again to allow an area of about 1,800 homes in Van Nuys to be included. This proposal attracted criticism from locals.
The 1994 Northridge earthquake caused damages in the surrounding area. The Community Redevelopment Agency sought to manage the rebuilding efforts. The homeowners in the Sherman Oaks area later won a lawsuit to prevent the agency from managing efforts.