[5] With a population of just 318 in the 2010 census, it is the smallest county seat in the state of Indiana, lying just south of the much larger North Vernon.

[7] Vernon was the site of a near-battle on July 11, 1863, during Morgan's Raid in the American Civil War.

John Hunt Morgan, targeting the Ohio and Mississippi Railroad, demanded the surrender of the town, which was defended by 100 local militia in strong positions on hills and bluffs overlooking the Muscatatuck River and 178 Union troops under the command of Colonel Hugh Williams.

[8][9] The defenders successfully stalled Morgan by demanding time to consider surrender, and then requesting time for the evacuation of women and children, until 1,000 Union troops under the command of Brigadier General John Love could arrive from Seymour.

Major General Lew Wallace also arrived later to take command of the entire Union force converging on Vernon.

Morgan ultimately retreated south toward Dupont, Indiana, rather than risk a confrontation.

32.8% of all households were made up of individuals, and 11.1% had someone living alone who was 65 years of age or older.

Famous people who visited and lived in Vernon include: Alexander Campbell, founder of the Christian Church and Bethany College; Henry Ward Beecher, who came to Vernon early in the Civil War and made a plea for Lincoln and the Union at the Courthouse; and Lord Flanigan, English nobleman, who was at one time a citizen of Vernon.

The 1945 novel The Friendly Persuasion by Jessamyn West and its 1956 Oscar-nominated and Palme d'Or winning adaption, starring Gary Cooper, are set in and around Vernon during the Civil War.