Eddyville, the seat of Lyon County, was settled around 1798 and named for the eddies in the nearby Cumberland River.

Taking six years to build (1884–1890), the massive stone prison structure towers over Lake Barkley and is sometimes called "The Castle on the Cumberland."

Its electric chair has had a long history of use, dating to the period before 1936 when executions were still publicly conducted in Kentucky for some crimes (e.g. rape as in the case of Rainey Bethea) while electrocutions at Eddyville were strictly reserved for others (e.g., murder).

The situation was resolved by Lee S. Jones, a native of Lyon County who had attended law school and settled in Louisville, where he had gained a reputation as one of the best "tax lawyers" and made his wealth.

Eddyville residents accepted his offer and on August 13, 1959, the official plat for the new town was filed with the county court clerk.

A large group of people gathered for the event, which was held in a field, close to the site of the current post office.

During the time of building, Eddyville was "booming" and, with the impoundment of Lake Barkley in the 1960s, tourists began making their way into the area for the abundance of fish and boating.

Three brothers, Bob, Darrell and Ben Jent, purchased a tract of land in the city limits of Eddyville and started construction of a mall, which opened the following fall with ten stores.

The opening of the mall brought a surge of progress to Eddyville, as a variety of businesses began to move into the city.

It has been said the mall did more for the progress of Eddyville than any other endeavor since the establishment of the town in 1799, with the possible exception of the building of the Kentucky State Penitentiary.

Hundreds of homes and businesses were damaged or destroyed in Eddyville and Lyon County from an EF4 tornado that ripped through western Kentucky on December 10–11, 2021.

[10] Eddyville is located in north-central Lyon County and is bordered to the west by Kuttawa and to the south by Lake Barkley on the Cumberland River.

U.S. Route 641 passes through Eddyville with US 62 but splits off at the northeast border of the city and leads north 18 miles (29 km) to its northern terminus in Marion.

Mineral Mound State Park occupies a peninsula in Lake Barkley in the southern part of the city.

The Kentucky State Penitentiary, also fronting on Lake Barkley, is within the southernmost extent of the Eddyville limits, 5 miles (8 km) by road south of the center of town.