Knoebels is located in a small wooded valley in central Pennsylvania. The valley, originally known as "Peggy's Farm", with its creek-fed swimming hole, was a popular picnic destination in the early 20th century, attracting Sunday travelers and horse-drawn hayride wagons. Henry Knoebel, who farmed in the area, tended the horses and later sold soft drinks, ice cream, and snacks to the visitors. As the popularity of "Knoebels Grove" grew, Knoebel leased plots of land along the creeks for use as summer cottage sites. Some of these privately owned cottages, as well as cottages Knoebel built and rented, still exist in the park.