The town was first settled around 1815. The Town of Ellicottville was established in 1820 from the Town of Franklinville (then known as Ischua). The town lost some of its territory when the Town of Ashford was formed in 1824. In 1858, a small part of the town was taken to aid the formation of the Town of East Otto.
The Village of Ellicottville was formerly the county seat for Cattaraugus County.
As of the census of 2000, there were 1,738 people, 770 households, and 462 families residing in the town. The population density was 38.5 people per square mile (14.9/km²). There were 2,097 housing units at an average density of 46.5/sq mi (17.9/km²). The racial makeup of the town was 98.16% White, 0.17% Black or African American, 0.69% Native American, 0.35% Asian, 0.23% from other races, and 0.40% from two or more races. Hispanic or Latino of any race were 0.86% of the population.
There were 770 households out of which 22.9% had children under the age of 18 living with them, 50.5% were married couples living together, 7.1% had a female householder with no husband present , and 40.0% were non-families. 34.4% of all households were made up of individuals and 12.7% had someone living alone who was 65 years of age or older. The average household size was 2.24 and the average family size was 2.86.
In the town the population was spread out with 22.2% under the age of 18, 5.4% from 18 to 24, 25.4% from 25 to 44, 29.8% from 45 to 64, and 17.3% who were 65 years of age or older. The median age was 43 years. For every 100 females there were 97.1 males. For every 100 females age 18 and over, there were 95.9 males.
The median income for a household in the town was $43,571, and the median income for a family was $50,813. Males had a median income of $40,000 versus $21,818 for females. The per capita income for the town was $23,291. About 5.5% of families and 7.7% of the population were below the poverty line, including 8.9% of those under age 18 and 8.3% of those age 65 or over.