123 Sesame Street repackages episodes from the 25th, 29th, 30th, and 31st seasons. Its title is derived from the fictional address of the franchise's titular location. Unlike Unpaved, this package was explicitly aimed at preschoolers. It was used as a way to introduce a new generation of viewers to older episodes that still managed to meet modern educational standards. Many installments of this package were incorporated into marathons and events consisting of otherwise brand-new content.

123 Sesame Street also debuted in 1999. It was never shown on TV Land and was regularly broadcast twice a day on Noggin and once at 8:00 AM on Nick Jr. When the Noggin channel was restructured in April 2003 and many CTW programs were dropped from its regular schedule, 123 Sesame Street replaced all other airings of Sesame Street content (with the exception of Play With Me Sesame). The package continued to air until 2011, about nine years after Unpaved was removed.