Plans to spin off General Hospital were announced in December, 1996. ABC had previously passed on the idea of a GH spin off proposed by former head writer, Claire Labine. Tentatively titled GH2, the series was set to revolve around interns at the medical school across from General Hospital. Wendy Riche, executive producer of General Hospital, was hired to fill the same role for the new series. Riche said of the new show, "This will be a multigenerational show, which is the kind of drama we've always done at GH". It was later announced that the series would be titled Port Charles, after the fictional city the series are set, and would star Jon Lindstrom and Lynn Herring, playing their roles from GH. The series premiered with a two-hour prime time special, that aired on June 1, 1997. It started in its regular timeslot the following day, replacing the canceled The City. The series also featured the return of General Hospital characters Scott Baldwin (Kin Shriner), and Karen Wexler (Jennifer Hammon). After the series premiered, it was unclear if Lindstrom, Herring, and Shriner would remain with the series. It was later confirmed the actors would stay on the show.
Riche later recalled the creation process by saying, "We knew that The City was probably not going to last. I was having lunch with Pat at some event. We were talking about The City and what to do with that timeslot. I said, 'If I were a programmer, I would start the ABC lineup with a half hour of the west wing of General Hospital with the interns in a learning hospital, and cap the day off with General Hospital. I would interface the characters in Port Charles with both wings of General Hospital.' Pat thought that was a great idea. She thought about it for a few hours, ran it by upper management, and told me to write it up. I sat down, wrote down some characters and storylines, sent her back some pages, and created the show. That was a natural bridge as a programmer. I had worked as a programmer at ABC and FOX so my head also thinks in those terms. We wanted to bring continuity to the show, which was Lucy, Kevin, and Scotty."
In the first episode, tenured nurse Audrey Hardy (General Hospital's longest-running character, portrayed by Rachel Ames) was injured and an intern had to operate on her with a power drill to save her life. Despite low ratings, Port Charles celebrated its first anniversary on June 1, 1998, as the series slowly continued to establish its own audience and improve in its time slot.
In its first few years, Port Charles developed a reputation for focusing most of its energies on the medical school program, setting more of its main action at Port Charles' General Hospital than was seen on the parent show, General Hospital. As it evolved, it turned its focus to stories with gothic intrigue that included themes such as forbidden love, vampires, and life after death (somewhat similar to the earlier series Dark Shadows, which also aired on ABC in the late 1960s).
In December 1999, Julie Hanan Carruthers was promoted to executive producer after Wendy Riche wanted to step down to focus on General Hospital. Carruthers was the senior supervising producer of Port Charles, while serving the same role on General Hospital at the inception of Port Charles.