The area was originally a Native American village and the tribal seat of the Bear Clan of the Potawatomi Indians.

The name "Mukwonago" is derived from mequanego which translates to bear's den.

Many of the streets and roads are named after the city's founders, such as Ira Blood, Major Jessie Meacham, Sewall Andrews, and Thomas Sugden.

[8] It is situated at the southwestern flank of the sprawling Vernon Marsh, and encircles Upper and Lower Phantom Lake(s).

Upper (110 Acres) and Lower Phantom (373 Acres) Lakes are part of the Village of Mukwonago, managed by Phantom Lakes Management District (PhantomLakes.us).

Mukwonago has a hot summer and a cold winter (Köppen classification) humid continental climate.

The racial makeup of the village was 89.0% White, 0.1% African American, 0.4% American Indian and Alaska Native, 4.0% Asian, 0.0% Native Hawaiian and Pacific Islander, and 4.9% from two or more races.