The village is named after Samuel McGraw and is in the eastern part of the town of Cortlandville, east of the city of Cortland.

McGrawville, as the settlement later came to be known, grew up on either side of the road near McGraw's initial homestead, taking advantage of water power on the adjacent Trout Brook to drive an early grist mill (1812) and a sawmill.

An ashery was established at an early date to profit from the clearing of new farmlands in the surrounding area, and in 1818, the hamlet acquired its first store.

In 1823, a cemetery was established within the boundary of the Main Street Historic District, and, by 1830, ten houses had been built within the small settlement.

"[3] Originally it was called McGrawville, and that name appears on an 1855 map,[4] but it was officially incorporated as McGraw in 1869.

The factory was reopened and incorporated as the McGraw Corset Company in 1890 and employed over 400 men and women in the area.

The village was home to New-York Central College, McGrawville, an institution of higher learning founded by Free Baptists in 1849.

A smallpox epidemic, along with social and political opposition and financial problems, brought about the college's closure in 1859 or 1860.

According to the United States Census Bureau, McGraw has a total area of 0.99 square miles (2.56 km2), all land.

As of the census[13] of 2000 the largest self-reported ancestry groups in McGraw were: English at 31%, German at 13%, Irish at 12%, Dutch at 7%, Italian at 6%, French at 6%, Polish at 4%, Scottish at 1%, Scotch-Irish at 1%, Welsh at 1%, Greek at 1%, American Indian tribes, specified at 1% and Portuguese at 1% There were 382 households, out of which 35.1% had children under the age of 18 living with them, 54.7% were married couples living together, 12.3% had a female householder with no husband present, and 29.1% were non-families.