The town is on the county's eastern border, east of Ithaca, in the Finger Lakes region.

The region was part of the Central New York Military Tract, land given as compensation to soldiers of the American Revolution.

Robert Harpur, a Clerk in the office of the New York State Surveyor General who named numerous New York townships in 1790 based on his own classical studies, named Dryden for John Dryden[4] (1631–1700), the English poet and a translator of the classics (including the works of Virgil, with the town of Virgil being the next town east of Dryden).

Dryden was also the translator of Plutarch's work Lives of the Noble Greeks and Romans, which Harpur likely sourced for many of the names in the Military Tract.

In 1856, some areas in the far southwest part of Dryden were ceded to the growing village of Caroline, New York, created from the Town of Spencer in 1811.

In 2009, Dryden's Southworth Library sold an original manuscript of an Abraham Lincoln speech that had been delivered at the White House after his re-election.

It sold for $3.44 million, a record-high selling price for an American historical document at an auction.

5 was listed on the National Register of Historic Places in 1984, as was the Ellis Methodist Episcopal Church in 1993.

A small part of New York State Route 34B crosses the northwest corner of Dryden.