On June 9, 1915, the state of New York let a contract to improve all of modern NY 261 to state highway standards. The reconstruction cost $79,296.22 (equivalent to $ in ), and the roadway was added to the state highway system on December 26, 1916, as the unsigned State Highway 1281 (SH 1281). In the 1930 renumbering of state highways in New York, hundreds of state-maintained highways that did not have a posted route number were assigned one. NY 261 was assigned to SH 1281 by the following year. The alignment of the route has not changed since that time; however, ownership and maintenance of NY 261 northeast of the Lake Ontario State Parkway was transferred from the state to Monroe County at some point prior to 1997.
