The village of Penn Yan surrounds the northern tip of the east branch of Keuka Lake. The early settlement was unofficially called Union, but the residents were not happy with that name. The settlers from Pennsylvania wanted a name that reminded them of their native state and those from New England wanted a Yankee-sounding name. A compromise was made—Penn for the Pennsylvanians and Yan for the Yankees. Penn Yan has been the county seat of Yates County since 1824, when the county was chartered.
The opening of the Crooked Lake Canal in 1833 spurred the economy of the region. Many mills sprang up along the canal, including paper mills, plaster mills, potash mills and tanneries. The first railroads came to the area in 1850 with the construction of the Canandaigua and Corning Railroad.
Penn Yan became a grape-growing center to rival Hammondsport, but her neighbor to the south continued to be the winemaking center. Late in the 1800s as many as ten train-loads of grapes steamed out of Penn Yan on the Northern Central and Fall Brook railroads, carrying the label "Keuka." The "Keuka" brand was known for quality.
Keuka College, an independent four-year, coeducational college at a scenic lakefront location, is situated in nearby Keuka Park. Penn Yan is also the home of Birkett Mills, one of the largest producers of buckwheat products in the world.
Indian Pines Park is located west of the village and Red Jacket Park is south of the village. The Keuka Lake Outlet Trail, a Yates County linear park, extends for six miles from Penn Yan to Dresden. Keuka Lake State Park is six miles west of Penn Yan.