A store was established on the present site of Ilion as early as 1816, but the village really dates from the completion of the Erie canal in 1825.
Ilion is a part of the township of German Flats (pop. in 1900, 8663; in 1905, 9489), settled by Palatinate Germans about 1725.
Here General Herkimer began his advance to raise the siege of Fort Schuyler (1777), and subsequently Ilion was the rendezvous of Benedict Arnold's force during the same campaign.