NY 54 continues northward along East Lake Road, moving away from the shore of Keuka Lake for a short distance. Passing the Lakeside Country Club in Milo, the route bends to the northeast and returns to the lakeside. A short distance after the curve, NY 54 intersects with CR 17 (Bath Road), which connects to a local airport. At this junction, NY 54 enters the village of Penn Yan, where it gains the moniker of Lake Street. Bending northward, the route becomes residential, soon turning to the northeast into downtown as a two-lane commercial street. Within the village, NY 54 continues northeast along Lake, although farther away from Keuka Lake, intersecting with NY 14A (Liberty Street / Brown Street). Paralleling an outlet, NY 54 continues northeast, intersecting with East Main Street, where NY 54 turns north onto West Main Street as the Lake Street right-of-way terminates.