This stream-crossed valley beneath 3,200-foot Pakatakan Mountain has attracted travelers since the Lenni Lenape found good hunting and fishing here hundreds of years ago. The first European settlers arrived in the region in 1763, and a small community began to grow around a water-powered mill established on the man-made Binnekill in 1784. Originally known as Middletown Center, the village was renamed in honor of a descendant of Robert Livingston, holder of the half-million-acre Hardenburgh Patent that encompassed this area. The village served as a trading and social hub for farm families who made a living from the land, producing milk and cauliflower and harvesting timber and bluestone. The Ulster and Delaware and Delaware and Northern Railroads brought tourists to hotels and boarding houses. Margaretville's fortunes have ebbed and flowed with its waterways, which periodically inundate the valley. The East Branch of the Delaware River was dammed in the early 1950s to create the Pepacton Reservoir, part of New York City's water supply system, forcing 1,000 people to relocate from four communities and dozens of farms. Yet Margaretville takes pride in being at the center of a 1,600-square-mile watershed that supplies clean water to half the state's population.