Embsay was originally a Celtic settlement, possibly founded at the same time as a local monastery, destroyed in the Viking raid in 867AD. The village has a Saxon name and is listed in the Doomsday Book as "Embesie", which translates as "Embe's enclosure". At that time, much of the area was wooded, this was progressively cleared over time to provide farmland. In 1121, Cecily de Romille and her husband founded a priory at Embsay. The Augustinian members of the priory dedicated it to Saint Cuthbert and received local tithes. In 1154 they exchanged estates with the de Romille family and moved to Bolton Abbey, which was a more fertile location. The priory flourished and grew rich on the profits of sheep farming and wool trading. In 1305, Edward I granted a charter for an annual fair at Embsay.
The Industrial Revolution resulted in several mills being built in Embsay.
Embsay Village Hall events include film nights, pantomimes, bowls, and jumble sales.
The village has a newsagent including the village post office. Other businesses in Embsay are a hairdresser and arts and crafts store. Embsay has two public houses: the Elm Tree Inn and the Cavendish Arms. The Elm Tree Inn and Elm Tree Square take their names from a tree that stood there for many years. It was replaced in the late 20th century because of Dutch elm disease, but in 2006 that replacement was also taken down. A further replacement was planted in 2007.
The village has a Church of England voluntary controlled primary school which receives pupils from Embsay, Skipton and farther away. It was ranked the 141st best primary school in England.
Embsay railway station was built in 1888, and is the current terminus of the heritage Embsay and Bolton Abbey Steam Railway. There is a bus service between Embsay and Skipton eight times a day on weekdays and three on Saturdays.
The village has a cricket club which competes in the Nidderdale & District Amateur Cricket League. The village also has a football club. Both clubs play at the same ground on Shires Lane at the north of the village. The club grounds are named the 'Robinson Memorial' after a local family who supported the club. Also at the north of the village is a recreational ground with a climbing frame and small football pitch.