The Rip Van Winkle House was located just north of Palenville on the old mountain road that went from Sleepy Hollow to the Catskill Mountain House.
The smaller house (shanty) was built in 1845. Ira Sax owned the shanty in 1867, and he hired William Comfort to build a larger boarding house. In 1880, Ira Sax sold the lot and Rip Van Winkle Boarding House to Elizabeth Lusk. Elizabeth Lusk was the wife of Gilbert Lusk. Gilbert Lusk then managed the property and the boarding house. It is alleged that Thomas Cole painted an image of Rip Van Winkle over the door. Gilbert died in 1885. His wife, Elizabeth Lusk continued to operate the business under the management of H. A. Schutt and J. M. Miller.

The Mountain House Road and the Rip Van Winkle house began a steady demise in 1892 when the Otis Company built an inclined railway up the mountainside to the Catskill Mountain House. Eiizabeth Lusk sold the property to Sarah Emory in 1893 who then sold the property to Robert M. Mabie in 1896. Robert's investment was a poor one. The property deteriorated. Around 1902 it was abandoned. It is believed to have burned to the ground around 1918. The Mountain House Road is now used as a hiking trail and snowmobile trail in the winter.