In 1890 this was a hamlet called Lealholm Bridge in the Parish of Glaisdale. At some time a paper mill existed here employing some 20 people and it was as a river crossing that Lealholm grew and became a focal point for the surrounding dales. The origins of this community stretch back to a period when farming and the movement of stock was almost exclusively the main source of activity. Lealholm was a convenient place for travellers to cross the River Esk. People set up residence here in the hope and expectation of earning a living from such travellers. The Sunday Times recently described Lealholm as "the prettiest village in Yorkshire".
A honeypot during the summer months, Lealholm is located midway along the Esk Valley between the villages of Glaisdale, to the east and Danby to the west. Lealholm is on the route of the Esk Valley railway line, which runs from Whitby to Middlesbrough, and is served by Lealholm railway station. A large part of the community is involved in farming due to the high fertility of the slopes in Eskdale, whilst other members of the community are involved in tourism.
The River Esk runs through the centre of the village. Its stepping stones, over the bridge and beyond the Board Inn, have provided hours of fun for generations of children. The heights of the severe floods which took place in 1840 and 1930 are recorded on the wall of the Wesleyan Chapel close by.