The five are teams led by Blackstaff Architects, Charles Tashima Architecture, Mark Wray Architects with Seed Landscape, OMI Architects and Periscope Studio.
Full design proposals are due to go on display to the public on 3 August for consultation as part of the competition's second stage.
It is hoped that the winning design will create a vibrant special space in the town centre which will complement other developments in the town including the new Shakespeare North Playhouse and a planned cinema.
The Market Place was the centre of economic and social life of the town for almost 700 years but has been less used in recent decades. Meanwhile, in 1974, the town, which lies eight miles from Liverpool, became subsumed by Knowsley, Merseyside. Now Knowsley Borough Council, with the help of a £1.848million grant from the Heritage Lottery Fund (HLF) and partners, is leading the heritage-led regeneration of the town centre in a five year plan called Prescot Townscape Heritage Initiative (THI).
The Market Place is the single largest project of the entire THI.