This is one of the six Wooden Churches of Southern Little Poland, on the UNESCO list of World Heritage Sites since 2003.

First Slavic settlements here date back to the early Middle Ages, and according to parish documents from 1781, first Roman Catholic church was established here in 1141, but this has not been confirmed by any other sources.

By 1326, Lipnik had a schultheiss named Konrad, and a typical medieval grid plan, with a market square and town hall.

The period of prosperity for Lipnica ended in the 1650s, when, during the catastrophic Swedish invasion of Poland (known as the "Deluge"), the town was captured and burned to the ground by Swedes and Transilvanians.

In early months of World War I, the area of Lipnica witnessed heavy fighting between Russian and Austro-Hungarian troops (see Battle of Galicia).