Penticton sits on a delta that separates Skaha Lake on the south and Okanagan Lake on the north. The area was originally the home of Okanagan First Nations who spoke the Nicola-Similkameen language (now extinct). Speakers of the Okanagan language generally believe that the name Penticton derives from the Okanagan word pen-tak-tin which means “the always place” in the sense of a permanent home. Some people have suggested, however, that the original name was snpnpiniyatn which mans “place where deer net was used.”

Penticton was considered to be a prime site as there was lots of fresh water and game nearby. It was also important for its location and had a reputation as the central rendezvous for the people of the entire Okanagan Valley.

The first European to visit the area was the fur trader, David Stuart, an employee of John Jacob Astor's Pacific Fur Co. The first European settlement in the valley was the Oblate Mission (Pandosy Mission), established near the present site of Kelowna in 1860.

Regardless of Penticton’s actual meaning, Tom Ellis was told this was the First Nations name for the area and he used the anglicized version for his Penticton Ranch which he founded in the 1860s. He was Penticton’s first non-native settler. Ellis's holdings reached from Naramata to the U.S. border. He found a ready market for his beef in the Canadian Pacific Railway and the new mines at Rossland, Rock Creek and Fairview. In l908 Ellis sold his land to the Southern Okanagan Land Co. who divided it up, built an irrigation system and began a campaign to attract settlers with an interest in farming.

Transportation to Penticton after 1893 was by Canadian Pacific lake boat. The boats went north along Okanagan Lake to Okanagan Landing where passengers could board trains bound for Sicamous on the mainline of the CPR. The Kettle valley Railway arrived in Penticton in 1912 and a real estate boom began. Twwenty-two companies started selling lots, some of which had been subdivi9ded as early as the 1890s. Penticton changed almost overnight into a bustling town.

Two sternwheelers alone remain out of the numerous boats that plied Okanagan Lake. The SS Sicamous, built at Okanagan Landing in 1914, was the largest of the sternwheelers on the lake. It was retired from service in 1937 and was eventually acquired by the City of Penticton which beached it and has now restored it as a heritage site.