The town became a well-known tourist destination early in the 20th century; its picturesqueness and the scenery of what is now Morton National Park, combined with being served by the railway network, made it a pleasant and convenient holiday area for city dwellers who could not afford more expensive accommodations at the popular Blue Mountains resort area.

By the 1950s, however, changes in lifestyle, particularly the affordability of the motor car, gave city dwellers more options and Bundanoon declined.

The Sydney real estate boom of the early 21st century made Bundanoon an affordable haven within commuting distance of the city.

76.6% of people living in Bundanoon were born in Australia; the next most common countries of birth were England 8.7%, New Zealand 1.4%, and Germany 1.1%.

The Primitive Methodists moved to a new building in 1885 (now the Uniting Church) and leased the original site to shop owners.

[12] On the day of the 2011 census, 4.1% of employed people travelled to work on public transport and 65.3% by car (either as driver or as passenger).

[13] Bundanoon has a number of heritage-listed sites, including: The town was originally named Jordan's Crossing.

The change of name for post office was gazetted in April 1881,[16] although it had been reported as "Bundanoon township at Jordan's Crossing" when a meeting was held in 1870 to establish the public school.

Established in the early 1980s, the Bundanoon History Group meets once a month in The Old Goods Shed, where its collection of photographs and written records are held.