About 600 parking meters are being torn down this week from the San Pedro and Wilmington areas. About 200 others are being upgraded to accept credit cards, while decreasing rates and increasing time limits.
Two city-owned parking lots will also offer free parking.
"This is just a big relief, because down the years, we lost so many customers," said Fred Rosenberg, a San Pedro business owner.
Rosenberg says he's paid thousands in parking ticket fines outside his furniture store, even paying for his customers at times.
At other businesses around San Pedro, signs remind customers to feed the meters.
L.A. City Councilman Joe Buscaino, who proposed the plan, says free parking will be an incentive for visitors and attract customers to downtown businesses.
"We are competing against the Targets, the Del Amos and every other entity that offers free parking," said Eric Eisenberg, San Pedro Property Owners Alliance Board. "In order to drive our customership here, we need more tools in our toolbox."
City officials say that the strongest argument for removing the parking meters is that they're actually costing more money to maintain than the revenue they're bringing in.
"The vast majority, over 60 percent, were under-performing and barely generating enough revenue to cover the staff costs of emptying and maintaining the parking meters," said Buscaino.