After the opening of the Erie Canal in 1825, Fonda thrived with the growth in trade and traffic that accompanied it. The canal provided transportation and commercial links to communities around the Great Lakes. Fonda became a center of cheesemaking, which was part of the regional dairy industry. The area was devoted to agriculture. As the county seat, it also did well with the arrival of the railroad in 1835, which increased cross-state transportation and shipping of goods. The village was incorporated in 1850.