The land now occupied by Bully Hill was originally part of the Taylor Wine Company, which moved its operations in 1920. In 1958, Greyton H. Taylor and Walter S. Taylor purchased the original property and established Bully Hill Farms. The two began converting the native American grapes on the land to French-American hybrid varieties, pioneering those cultivars in New York State. Walter Taylor represented the third generation of his family in wine-making, continuing a tradition dating to 1878.
Walter was fired from the Taylor Wine Company in May 1970 and co-founded Bully Hill that same year. Greyton Taylor died in 1971, leaving Walter the controlling shareholder. Taylor also established what he described as the first wine museum in America on the property and became an outspoken critic of New York State wine-makers he accused of using out-of-state grapes.
In July 1977, following the merger of the Taylor Wine Company with Coca-Cola, the Taylor Wine Company sued Walter Taylor to prevent him from using his surname in connection with Bully Hill's products. US District Court Judge Harold P. Burke upheld the complaint, ordering that the Taylor name be removed from all Bully Hill labelling, packaging, and advertising. Taylor responded by physically blotting out his name wherever it appeared on products and launching a public media campaign he called the "Johnny Grapeseed" tour.
The publicity generated by the dispute proved commercially beneficial: Bully Hill's sales climbed from $650,000 in 1977 to more than $2 million by 1980, and visitor numbers increased by 25 percent. Judge Burke made the injunction permanent on October 5, 1979, imposing eleven specific stipulations governing any use of Walter's signature — including a requirement that his name appear no larger than one-quarter the size of the Bully Hill Vineyards trademark on the same surface. On November 8, 1979, Taylor drove to the Taylor Wine Company to return prohibited labels and marketing materials, staging an impromptu parade in front of spectators. His response to the outcome became one of the most quoted lines in American wine history: "They took my name and heritage, but they didn't get my goat."
In 1982, the vineyard filed a trademark for the name "Space Shuttle Rose," which was contested by NASA; the Trademark Trials and Appeals Board denied NASA's action in 1987.
Bully Hill has maintained an extensive presence in motorsport since 1997, driven largely by the proximity of Watkins Glen International to the vineyard's Finger Lakes location. Its NASCAR history centres on NEMCO Motorsports and driver Ron Fellows. In the series now known as the ARCA Menards Series East, Bully Hill has sponsored cars driven at different times by Eric Bodine, Bryan Wall, and Dale Quarterley.
As of 2022, the vineyard's sponsorship portfolio extended to five professional and nine minor league sports teams. Bully Hill serves as the official wine partner of the Buffalo Bills, the Buffalo Sabres, the Nashville Predators, the Carolina Hurricanes, and the Boston Red Sox.
Bully Hill produces more than 200,000 cases of wine annually across over 40 selections and is the second-largest wine producer in New York State. The property includes a restaurant, a wine shop, two gift shops, and the New York State Wine Museum of Greyton H. Taylor and Walter S. Taylor Art Gallery. Distribution reaches approximately 30 states across the United States.