The town is famous for its beer festival called Chmielaki (Polish: chmiel means hop), and for its dairy products like yogurt and kefir.

Krasnystaw received its town charter from King Władysław II Jagiełło, who signed the document in Kraków, on 1 March 1394.

Due to convenient location along merchant route from Lublin to Lwów, it prospered in the 16th century.

During the January Uprising, the town and its area saw heavy fighting between Polish rebels and Russian troops.

In 1916, Krasnystaw received rail connection, and in 1919, already in the Second Polish Republic, the town became seat of a county.

On 18–19 September 1939, during the Invasion of Poland, Polish troops of the 39th Infantry Division fought here with advancing Wehrmacht units.

During World War II, numerous units of the Home Army and others operated in the area.

Finally, in May 1942, it became a transit ghetto where Jews were brought on their way to Majdanek or to the Sobibor extermination camp, where all were immediately murdered.

The municipal customs records of Krasnystaw for 1548 show a number of Jews resident in the town.