hapel Street was new in 1824 when Abraham Wagener donated a small lot to the Methodist Congregation, on the south side of the new street about halfway between Main and Liberty Streets. The little building was finished in 1826. The street was of course named for it, first Church Street, but soon Chapel Street became official, since at that time that's what Methodists called their houses of worship.
The congregation had its ups and downs, the largest "down" being the withdrawal in 1842 of about half of the members over the issue of abolition of slavery. This schism lasted until 1864, by which time most of the original protesters were dead. In any case, a number of revivals (including one in 1844 that drew 5000 people to the Hollowell farm in Milo) built the membership up until by 1857 it had outgrown the old chapel, and started to look for a larger building nearby. In addition, many of the surviving Wesleyans (the group that seceded) rejoined about this time.
Meanwhile, Penn Yan had been growing as well. In 1823 and 1824 Wagener sold off a whole series of residential lots on this side of Main Street, between the new house built by William M. Oliver, and the new Court House Square. Chapel Street was put through, and a number of houses were built on these lots, both north and south of the new right of way. Incidentally, the 10-year gap between the laying out of Chapel Street and that of Clinton Street is what produced the annoying dog-leg intersection. By the time Clinton Street was surveyed, a number of industrial buildings had been built where a true four-way intersection could have been built through, not to mention Wagener's original house, by then used as a tavern.
All these lots along Main Street were four rods (66 feet) wide on the street and 17 rods (280 feet 6 inches) deep, with a two-rod-wide (33 feet) alley running behind them from north to south. The lot at the corner of Chapel and Main Streets was sold in 1824 to Cornelius Masten; Masten sold it to Lewis Himrod, a local harness-maker, in 1833, but Himrod turned it over immediately to William M. Oliver. At about the same time Oliver acquired a number of parcels along this part of Main Street. Apparently there were still no structures on the property.
Oliver sold the lot in 1841 to a new church group, the Congregationalists, who were a schismatic anti-slavery faction of Presbyterians (just as the Wesleyans at the same time were breaking with the Methodists over the same issue.) The Congregationalists built a handsome little church on the corner, and used it until they rejoined the Presbyterian congregation in the late 1850s. They sold their church to the Methodist congregation in 1857, who used the building until 1898, when the present structure was erected.