Prospect Park was formed as a borough by an Act of the New Jersey Legislature on March 13, 1901, from portions of the now-defunct Manchester Township.
As of the census of 2000, there were 5,779 people, 1,822 households, and 1,432 families residing in the borough. The population density was 12,043.7 people per square mile (4,648.5/km²). There were 1,889 housing units at an average density of 3,936.8/sq mi (1,519.5/km²). The racial makeup of the borough was 61.17% White, 13.65% African American, 0.42% Native American, 3.15% Asian, 0.07% Pacific Islander, 13.70% from other races, and 7.84% from two or more races. Hispanic or Latino of any race were 38.26% of the population.
There were 1,822 households out of which 44.7% had children under the age of 18 living with them, 52.7% were married couples living together, 20.0% had a female householder with no husband present, and 21.4% were non-families. 17.0% of all households were made up of individuals and 6.6% had someone living alone who was 65 years of age or older. The average household size was 3.17 and the average family size was 3.56.
In the borough the population was spread out with 29.6% under the age of 18, 10.3% from 18 to 24, 32.8% from 25 to 44, 18.5% from 45 to 64, and 8.8% who were 65 years of age or older. The median age was 31 years. For every 100 females there were 90.8 males. For every 100 females age 18 and over, there were 84.7 males.
The median income for a household in the borough was $46,434, and the median income for a family was $49,405. Males had a median income of $31,951 versus $26,569 for females. The per capita income for the borough was $16,410. About 7.9% of families and 10.0% of the population were below the poverty line, including 14.4% of those under age 18 and 6.2% of those age 65 or over.
As part of the 2000 Census, 1.7% of Prospect Park's residents identified themselves as being of Albanian ancestry. This was the 11th highest percentage of Albanian American people in any place in the United States with 1,000 or more residents identifying their ancestry. In the same census, 3.2% of Prospect Park's residents identified themselves as being of Arab American ancestry. This was the sixth highest percentage of Arab American people in any place in the United States with 1,000 or more residents identifying their ancestry.