Nichols is a rural town bordered by the Susquehanna River to the north and west, the Town of Owego to the east, and Pennsylvania to the south. Covering about 31 square miles, it combines a fertile river valley with rolling hills. The town's highest point is near Briggs Hollow at 1,628 feet, and its lowest point is 770 feet. Besides the Susquehanna River, the largest stream is Wappasening Creek, which empties into the Susquehanna at the Village of Nichols.

The first settlers arrived in 1787, though they did not own land. Permanent settlement began in 1791 near Asbury Church on West River Road. Many early settlers came from the Minisink area, the Wyoming Valley, or western New England.

Nichols, named after Colonel Nichols, was established as a town in 1824. Commerce thrived with goods floated down the river, sold upon reaching the lower Susquehanna, and rafters walking back to New York. The first bridge across the Susquehanna was built from Nichols to Smithboro in 1831, and the Erie Railroad reached the area in 1849. Nichols became a key shipping point for agricultural goods and timber, growing significantly. By 1881, the Delaware, Lackawanna & Western Railroad connected Nichols to Buffalo. Improved roads facilitated the cemetraycemetery
movement of goods, making Nichols a bustling center during harvest seasons.

The first "Old Home Day" celebration was in 1912, a tradition that continues today. High water was a persistent problem until dikes were built in 1971. The last class graduated from Nichols High School in the mid-1950s, with a new elementary school opening in 1958. Nichols joined the Tioga Central School District, while its eastern part joined the Owego-Apalachin School District.

The opening of an IBM facility in Owego in the late 1950s led to changes, with local businesses closing and fewer employment opportunities in town. Route 17, opened in the early 1970s, made commuting to Binghamton or Elmira easier, turning Nichols into a "bedroom" community.

As of the 2020 census, Nichols has roughly 2,357 residents. The community still offers groceries, hardware, limited clothing, gasoline, and dining options, though more extensive needs require a trip out of town.