Beginning in the first half of the 19th century many steamboats operated on the lake which largely functioned as transports between Penn Yan and Hammondsport, often in service of the wine industry.

Beginning in the mid 19th century the lake has since been surrounded by vineyards and wineries which earned it the title, the Cradle of the Wine Industry, in New York.

During the beginning of the 20th century the first water-craft airplanes were developed and tested on Keuka Lake by aviation pioneer Glenn Curtiss.

[2] In 1779, during the American Revolutionary War, the Sullivan Expedition clashed with and defeated the British who occupied the region, along with the various Iroquois tribes who were allied with them.

Upon their return home, troops under the command of John Sullivan carried encouraging reports of the natural beauty and rich soils of the lake region to populations in the east.

This encouraged many white settlers to migrate to the region and establish wheat farms about the lake, with grist mills along its outlet.

[3] In 1788 the township of Jerusalem, New York was founded by a Quaker Evangelist preacher, Jemima Wilkinson, who, after recovering from a near-death illness, referred to herself as the Public Universal Friend.

In 1794 the first sawmill to emerge inside the village limits of Penn Yan was established by Lewis Birdsall, who commissioned Enoch Malin to oversee its construction on the outlet's north bank.

[10][11] The prospect of a canal, even before it was completed, inspired new business and considerable growth in the towns around Keuka Lake.

The first steamboat built was called the Keuka Maid, a sidewheeler of 85 feet in length, with a steam engine that was fueled by wood.

Built on the Hammondsport waterfront by the Union Dry Dock Company of Buffalo, the steamer cost $40,000.

[20] After some mechanical delays with the launching apparatus the ship slipped into at 7:30 pm amid the cheers of those who came to see the event.

The trial run of the entire length of was made on June 22, as the ship cruised from Penn Yan to Hammondsport at the opposite end of the lake 20 miles to the south.

[18][19] The wine industry got its start in 1830 when Episcopal Reverend Bostwick planted a small vineyard at his rectory in Hammondsport, which produced an exceptional vintage.

A grower of Vitis vinifera grapes, Frank encouraged other winemakers to grow this type of grape, which met both approval and disapproval from the other growers in the lake region[23] Hammondsport was the birthplace and home of Glenn Curtiss, a pioneer of naval aviation, and is now the site of the Glenn H. Curtiss Museum.

Early in the 20th century, the first watercraft airplanes invented by Curtiss were developed and tested on Keuka Lake.

[24] Several variations of the Curtiss Model H, the world's first "flying boat", made numerous take-offs and landings in Keuka Lake.

The productive fishery is supported by huge numbers of baitfish, most notably alewives (sawbellies), and is a very popular lake with area fishermen.

Camp Iroquois, run by the New York State Sheriffs Institute, is located on the eastern side of the bluff.

Camp Good Days and Special Times is located on the western side of the northwest branch of the lake.