Trumansburg was home to Algonquin tribes before the Iroquois nations moved into the area between 1000 and 1300 A.D. ("the medieval warm period"). The Algonquins were still here when the Europeans arrived in upstate New York in the 16th century, but they were vassals of the Iroquois."Taughannock", the name of a local creek and its falls, is an Algonquin word, but "Cayuga" is derived from the Iroquois "Guyohkohnyoh".
Trumanburg was settled by Abner Treman and his extended family after 1792. Treman, who was from Columbia County, New York, near the Berkshires, had been a captain in the Revolutionary War. For his service he had been awarded 600 acres of land in the "Military Tract". The land had been seized from the Iroquois by the new American government because the Iroquois did not show sufficient fervency for the American cause during the war.
Treman was lucky enough to get a parcel that was perched on the rim of the Cayuga Valley, just where Trumansburg Creek began to dive down a glacially over-steepened slope toward the lake. There are several falls in the middle of what is now the village of Trumansburg. It was an excellent site for a mill. Treman cleared land and planted crops, and he also built a grist mill. It was behind what is today the Masonic Lodge on East Main Street. His brother-in-law John McLallen built a tavern and eventually a dry-goods store and the Trumansburg economy grew from there.
Through the 19th century the land was entirely cleared of timber and put under the plow. The mills proliferated along both Trumansburg and Taughannock Creeks. Since 1810 the village has been bisected by the former Ithaca-Geneva Turnpike; it is now State Route 96. When the Seneca-Cayuga Canals connected to the Erie Canal after 1825, Trumansburg developed a port at Frontenac Point at the mouth of Trumansburg Creek on Cayuga Lake. The Lehigh Valley Railroad came to Trumansburg in 1874 and continued service until 1959.
In the late 19th century Ithaca began to grow rapidly at the expense of Trumansburg. Industry began to develop there rather than in the upland village. Some businesses, notably Morse Chain, moved from Trumansburg to Ithaca in the late 19th century.
Increasing centralization of agricultural processing through the first half of the 20th century also made the commercial sector of the Trumansburg area shrink. Creameries, grist and flour mills, canneries, egg processing plants all disappeared from the countryside. After World War II most of the remaining industry in the area moved away or was rendered obsolete.
Farming did not die out, but through the 20th century less and less land was worked. Many woodlots on abandoned farmland now support mature forest. There is a small, but viable logging industry in the area.
Since the 1970s many artists and artisans have moved into the area, so that there are now an above average number of musicians, potters, woodworkers, and painters in the population. By and large,however, most residents of the area are employed in the greater Ithaca area. Cornell University is the region's largest employer, followed by Ithaca College and Borg-Warner (a descendant of Morse Chain). The economy of the Trumansburg area is now dominated by the service sector.