Kaaterskill Creek, exiting the Clove, runs through the town, and was spanned by a swinging footbridge, destroyed during Tropical Storm Irene.

The famous painting Kindred Spirits depicts Cole and William Cullen Bryant near Kaaterskill Falls, just uphill from the town.

[4] With the coming of the twentieth century, the large boarding houses of the mountain top started to close, but Palenville and the surroundings were often visited by city dwellers.

Palenville was one of the Catskills' vacation resorts, hosting nearly two dozen small and medium-sized boarding houses and many hotels at the turn of the century.

Late in the 20th century an art gallery opened on Palenville's Main Street, and the Pine Orchard Summer Festival was founded.

Opening in 1980 and hosting its first national juried show in 1981, the privately owned and funded Terrance Gallery exhibited more than 1,200 American artists, in a call to revisit the historic gathering place of the 19th-century painters.

The Pine Orchard, located on 60 acres (240,000 m2) along the Manorville Road, through fundraising and grants refurbished a chapel into a theater and hosted opera, plays, musicians, writers and artists.

[5] Other noted artists who frequented Palenville and the Clove included Winslow Homer, Asher B. Durand, Thomas Addison Richards, John Frederick Kensett and Sanford R. Gifford.

Landscape painters of the 20th century included Albert Handel, Barry Hopkins, Athena Billias, Michelle Moran and Patti Ferrara.