NY 54 continues east through Urbana, crossing the southern end of Keuka Lake, one of New York's Finger Lakes. At this point, NY 54 becomes a lakeside highway, intersecting with CR 87 (Hammondsport–Wayne Road). NY 54 begins a bend to the north along Keuka Lake, as a two-lane rural highway overlooking the lake. To the west, Lake Road parallels NY 54 on the lakeshore and is a residential street. This pattern continues to the northeast for several miles, leaving Urbana for the town of Wayne, where the two roads both become residential, and enter the hamlet of Grove Springs. In Grove Springs, Lake Road merges into NY 54, which becomes the lakeside roadway along Keuka Lake, merging at-grade with CR 94 (Grove Springs Road). NY 54 bends eastward, intersecting with CR 95 (Day Road) and soon an interchange with NY 230, which forms a large junction to the southbound roadway. NY 54 continues east of NY 230, paralleling Keuka Village Road north along the lakeside, crossing the county line from Steuben County into Yates County.