The Village of Algonquin was settled in 1834 and incorporated in 1890, and sits in both Kane and McHenry Counties, and is located approximately 47 miles northwest of the Chicago Loop.

Algonquin was the location of Indian burial mounds known in the 1800s as the Algonquin Mounds. By 1834 the first settler of Algonquin, Samuel Gillilan, came to the area from Virginia. Settlers Dr. Cornish, Dr. Plumleigh, Eli Henderson, Alex Dawson, and William Jackson arrived shortly thereafter. There was some dispute regarding the original name of Algonquin, and numerous other names were suggested including Denny's Ferry, Cornish Ferry, Cornishville, and Osceola. But Samuel Edwards suggested the name Algonquin and on December 23, 1847, the name Algonquin became official.

School districts 158 and 300 serve students from elementary age through high school; there are also several private schools and quality child care centers in the area. A portion of the Village lies within Community College District 509, served by Elgin Community College. Community College 528, served by McHenry County College, also encompasses a segment of Algonquin.

According to the United States Census Bureau, the village has a total area of 10.0 square miles (25.9 km²), of which, 9.8 square miles (25.5 km²) of it is land and 0.2 square miles (0.4 km²) of it (1.60%) is water. The majority of Algonquin is located in McHenry County, with some overhang into neighboring Kane County. As of 2009 Algonquin is the 35th safest place to live in the United States.