In 1848 abolitionist Gerrit Smith gave 200 acres (81 ha) to Willis Hodges, a free black from Virginia, to settle a community with 10 families.

The families were disappointed at and ill prepared for the isolated frontier conditions and harsh winters, and lacked basic resources for building a town settlement, as Gerrit Smith had not offered anything except the parcels of land; John Brown, the famous abolitionist, a neighbor and fellow grantee who had asked Gerrit Smith for a tract in order better to organize in the area against slavery, could not offer much material assistance especially during the harsh winters, and Hodges and the settlers became discouraged and abandoned the community after two winters.

The resort's instant success allowed the Chases to expand operations, and by 1893 the Loon Lake House's capacity reached 500 guests.

Presidents Grover Cleveland, Benjamin Harrison, and William McKinley enjoyed stays at the Loon Lake House during their tenures.

Wealthy families of the period, including the Vanderbilts, Whitneys, Rothschilds, Rockefellers, and Guggenheims regularly stayed at the resort.

Additionally, popular cultural figures, such as composers Irving Berlin and George Gershwin, and authors Theodore Dreiser, Sir Arthur Conan Doyle, and Oscar Wilde vacationed at the Loon Lake House.