Its name is derived from a monastery, the great Abbey of Lerha, founded in 1205 by Hiberno-Norman magnate, Risteárd de Tiúit, for Cistercian monks.

An ancient earthwork, the Duncla (Irish Dún-chlaí meaning "fortified ditch") or Black Pig's Dyke, which runs south-eastwards from Lough Gowna to Lough Kinale, goes through the larger parish of Abbeylara, and passes about one kilometre north of the village.

Because of its proximity to Lough Kinale and Lough Derragh, with a plentiful supply of trout, tench, bream and pike, Abbeylara attracts anglers and local angling clubs hold regular competitions.

Abbeylara GFC are the local Gaelic football club.

On 20 April 2000, the Gardaí (police) shot dead local man John Carthy in a siege at his home.