The site of the village is at the base of the Wyoming Moraine which formed along the shores of ancient Lake Arkona during the retreat of the Wisconsin Glacier some 16,000 years ago.
Evidence of early human habitation exists at the site of Paleo hunting camps which were found just a kilometre south of Arkona dating back some 11,000 years.
The first known permanent settlers of European background were Asa Townsend (c.1775–alive 1851) and his wife Huldah Barstow, who first settled in Westminster Township near what became the City of London, Ontario.
In 1857, it was renamed 'Arkona' after the rugged cape on the Baltic Island of Rügen, a name suggested by resident cabinet maker Ephraim Brower and possibly by the incumbent postmaster Levi Schooley.
The advent of the automobile lessened local dependence on the village and its services, and led to gradual yet dramatic changes to Arkona's makeup, especially in the post-World War II era.
Despite the changes and loss of many local enterprises, the community still boasts a dental office, optometrists, a medical clinic, a grocery store, gas station, and several retail outlets.
A smaller celebration marked the 125 anniversary in 2001, although earlier that year the municipality had been amalgamated with Bosanquet Township (including the communities of Ipperwash and Port Franks, Ontario), the Town of Forest and Villages of Thedford and Grand Bend to form the new entity of Lambton Shores.