Denning is located in the western part of the county, deep inside the Catskill Mountains.

The location of the town in the Catskill State Park accounts in part for its low population.

William H. Denning, for whom the settlement was named,[3] bought a tract of land at a tax sale.

The Red Hill Fire Observation Station was listed on the National Register of Historic Places in 2001.

Most settlement is concentrated around the hamlet of Sundown on Rondout Creek, along the two branches of the Neversink River or in the plateau between the two valleys northeast of Red Hill, at elevations 2,500 feet (762 m) above sea level and higher.

Since the town is entirely within the Catskill Park, large tracts of land are owned by the state Department of Environmental Conservation as part of New York's Forest Preserve.

A lower mountain, 2,990-foot (910 m) Red Hill, has a fire tower on its summit popular with hikers.