In the late 1790's, the first white settlers in the region -- followers of a charismatic female religious leader named Jemima Wilkinson -- established the first mill on the creek near Seneca Mills Falls. These impressive falls originally dropped over shelves of limestone, which can still be seen; later, a dam was built to increase the volume of water retained above the falls and produce power for several mills at the site. Much later at the Cascade, the other large natural falls on the creek, a sprawling mill complex was built to produce carbon bisulfide. Grist and flour mills, sawmills, distilleries, fulling mills, paper mills, wooden implement factories - at one time, as many as 40 mills - operated using the relatively reliable flow of the creek. The Crooked Lake Canal was built to transport these goods and the abundant grain and other products produced in the region to the markets of the east. The canal never did turn a profit, and when it finally closed, a railroad was built along the towpath to transport people as well as goods. In turn, the railroad was overtaken by trucks and automobiles.Stones recycled from the Crooked Lake Canal were used in many of the later mill foundations. The only mill still operating on the Outlet Creek today is Birkett Mill in Penn Yan, the world's leading producer of buckwheat products. Nature is gradually reclaiming the area; however, mill foundations and the remains of water races and penstocks can still be seen along the creek.
In 1972, Hurricane Agnes destroyed much of the tracks, and the idea of developing the corridor into a trail took hold. Initially owned by the Yates County Legislature, the trail was sold to the Friends of the Outlet in 1995, after the Friends purchased several parcels in the gorge from New York State Electric & Gas. Since then, the Friends have acquired several adjoining properties, including 43 acres in the Hopeton Access area and the entire Cascade Mills complex where a small Visitor Center has been established. Currently, the eastern end of the trail terminates at Dresden, about a mile from the shore of Seneca Lake. A major effort is now underway to extend the trail that last remaining mile, so that the Keuka Outlet Trail will truly run "lake to lake".
The majority of the Outlet Park is coincident with the Crooked Lake Canal Historic District, which is listed on the New York and federal registers of historic places. The Yates County Legislature also designated the gorge area as the Keuka Lake Outlet Preservation Area, in recognition of its natural and historic importance and need for special protection.