The land that would become the Town of Danby was a part of the Watkins and Flint Purchase, a 336,380 acre patent granted by New York State to numerous eastern investors in 1794.

Danby's first European-American settlers, including Isaac and John Dumond and Jacob and Joseph Yaple, arrived in 1795.

The Ithaca-Owego Turnpike was completed through Danby in 1811, connecting Cayuga Lake with the Susquehanna River.

The physical geography of Danby mirrors this duality as the drainage divide between the Susquehanna River and Lake Ontario runs across the town.

Generally, waters in the northern and western portions of the town flow north into Cayuga Lake, Lake Ontario, and the St. Lawrence River, while waters in the southeastern portion of the town flow south into the Susquehanna River and Chesapeake Bay.

New York State Routes 34/96 runs north-south through the western portion of the town, through the valley of the Cayuga Inlet.

A Norfolk Southern Railway branch line between Sayre, PA and Ludlowville, NY runs through the western portion of the town, through the valley of the Cayuga Inlet.

There was a depot in West Danby, on the north side of Station Road, east of the tracks.

The Finger Lakes Trail crosses the town east-west through the Danby State Forest.