The first building erected in what is now the center of the village was built around 1798 by Alpheus Fairchild, who moved west from Connecticut. However, in what is now the eastern-most part of the Village, the Bodley homestead most likely stood well before the Revolution, as did portions of the Bevier and Sax farms. Originally named "Fairchild City," or just "The City," after Alpheus Fairchild, who bought most of today's village in 1798 from John A. DeWitt, Fairchild had a dwelling erected on part of the site where the George and John R. Hunt Memorial Building stands today. Nathan and Maria Hoornbeek bought the dwelling and enlarged it, converting it into an inn. The Hoornbeek Tavern was a gathering place for the citizens and many important decisions about the community were made at meetings held there. Indeed, the decision to change the name of the community to "Ellenville" was proposed at the Hoornbeek Tavern. Village leaders, unable to agree upon a new name, were persuaded by Ellen Snyder, Maria Hoornbeek's sister, to name the village after her.

Charles Hartshorn came to "The City" to try a case in the Hoornbeek Tavern in 1823, and liked the community so much he decided to stay. He was young, energetic, and forceful. He opened the first store in 1823, led the drive to choose a "real" name for the community, and applied to the federal government for approval of a post office. (He was named the first postmaster in 1823.) He erected a home for his family on the former site of the Hoornbeek Tavern and was elected first President of the newly-incorporated village of Ellenville in 1856.

Noted American composer Homer Newton Bartlett resided at 32 Maple Avenue in Ellenville for many years during the late 19th century.

Just north of the village, the Joseph Y. Resnick Airport (N89) is named in honor and memory of U.S. Congressman Joseph Yale Resnick, a Wawarsing native. Ellenville Regional Hospital, just north of the airport, and the Nevele Tower, just south of the village, were both dedicated by then-President Lyndon Baines Johnson, at Congressman Resnick's request. Two other U.S. Congressman were from Ellenville: Isaac Newton Cox and Joseph Hasbrouck Tuthill.

The village's post office building, the George and John R. Hunt Memorial Building and the former D&H Canal are listed in the National Register of Historic Places.

One of the first roads in America, the "Old Mine Road," which followed earlier Indian trails, led to sporadic Dutch and later settlements along its 104-mile length from New Jersey to Kingston, including Ellenville. But, with no navigable rivers, it was the construction of the Delaware & Hudson Canal in the 1820s that led to the first major boom in development of Ellenville as a canal town and manufacturing center. The D&H Canal was eventually superseded at the close of the 19th century by the New York, Ontario and Western Railway, more commonly known as the O&W or NYO&W, which opened up a significant tourism and hospitality industry, including dozens of hotels, inns, boarding houses, and bungalow colonies. The eventual modernization of the "Old Mine Road" into US 209 brought continued vacationers to "the mountains," even as the railroad closed in the 1950s. The Nevele Hotel, perhaps the most famous local resort, still operates under the name The Nevele Grand Hotel. Its sister resort hotel, the Fallsview, has recently been purchased and renamed Honor's Haven, and has undergone major renovations.

The canal and westward expansion led to various industrial opportunities. It's said that every pioneer wagon heading west carried a Napanoch axe and an Ellenville demijohn. Ellenville pottery and glassworks still remain sought-after collector items; many examples are on display at the Ellenville Public Library's Terwilliger House Museum. Knife manufacturing was a major industry in Ellenville and Napanoch for over 100 years; the Ulster Knife Company set up in the 1870s, eventually merging with Imperial Knife Company and Schrade Cutlery, finally becoming Imperial Schrade until its closing in 2004. Famous for "Uncle Henry" and "Old Timer" knives, the Schrade tradition is now maintained by several former executives and employees in the newly-created Canal Street Cutlery, specializing in high-end quality collector knives.

In the early 20th century, the rediscovery of the lost "Old Spanish Tunnel" at the base of the Shawangunk Ridge in Ellenville led to the development of the "Sun-Ray Spring" and the international marketing by White Rock beverage entrepreneur Frank T. Huntoon of "Sun-Ray Water," tested and promoted as the "World's Purest Spring Water." Although beset by financial difficulties from its inception, the water and its carbonated derivatives were sold until the early 1920s, and re-developed as "Pure Rock Mineral Water" in 1939, also serving as a base for Pepsi-Cola bottled in Ellenville during World War II.

In the late 1940s, Joseph Resnick, a radio officer in the U.S. Merchant Marine during the war, developed a turnable DIY antenna system just as the TV boom was taking off. He, and his brothers Harry and Louis, created Channel Master, and built one of the region's major manufacturing plants just north of the Ellenville border, along with an aluminum plant to fabricate necessary components. After selling the company to Avnet, production moved to South Carolina. The vacated Channel Master factory was eventually bought by Imperial Schrade, and the aluminum plant by V.A.W., and later Hydro Aluminum; both factories closed in the first decade of the 21st century, leaving hundreds unemployed, compounding Ellenville's economic doldrums that began with a decline of the tourism and hotel industry in the 1960s, and the development of regional shopping malls, which directed much shopping traffic away from the village.