Before European settlement, the area was originally occupied by the Bediagal people.

The area now known as Yagoona—Bass Hill, and north Bankstown—was once known as Irish Town, due to the high concentration of Irish rebels transported here from Ireland in the late 1700s. Land grants were issued to Irish families and finally the suburb of Yagoona was created in 1927.^[4] St Matthew's Anglican Church was built on Liverpool Road (now Hume Highway) in 1861 to cater for the Protestants of the district as well as to function as a school.^[4]

The main commercial area is located on the Hume Highway (Liverpool Road), near Yagoona railway station. In 1963,^[5] the Westfield Group built a supermarket on a vacant lot on the highway; the store opened as Coles New World, later became Franklins, and then an IGA.^[6] Yagoona was home to the first McDonald's restaurant in Australia, opened in 1971,^[3] but it closed in 1994.^[7][8] In July 2021, it was confirmed that a new McDonalds restaurant will open on the very same site as the first restaurant in Australia, coinciding with the franchise's 50th anniversary celebrations in the country. The restaurant opened on 17 December 2021.^[9]

Over recent years^[when?], this shopping strip has been in economic decline as a consequence of major banks (Commonwealth, National Australia and Westpac) and retailers leaving. Residents now find it more convenient to shop at nearby Bass Hill Plaza or further away at Bankstown Central or Westfield Parramatta. There have been some plans to rejuvenate the town centre in Yagoona in recent years by Bankstown City Council. "Initial suggestions, already supported by residents and visitors, include a larger supermarket, a new community centre, improved shopping environment, and a variation in housing."^[10]

Retailers here include an IGA Supermarket, a KFC fast food outlet,^[11] Australia Post,^[12] a number of discount stores, mixed businesses, three pharmacies, a fruit shop, bakery, a newsagent, a real estate agent, several cafés, furniture stores and medical centres. Another Australia Post is on Dargan Street, Yagoona West.^[12]

In 2006, a Salvation Army store opened in the town centre (where the Blockbuster videos store was once located and previously a Pizza Hut), which later was suspiciously destroyed in early January 2010.^{[citation needed]} The fancy dress store next to the medical centre/pharmacy was originally occupied by the post office. Previous businesses in and around the main commercial area include Top Video (burnt down in 1995), Video Ezy, State Bank (which closed in the 90's and is now a medical centre and pharmacy), a fruit and vegetable market and a liquor store next to the supermarket (now both furniture stores), Franklins supermarket (now IGA), a newsagency next to the railway station (later a cafe until an explosion closed it), a photo shop (now a discount store).^{[citation needed]}

The head office of RSPCA NSW, plus a shelter,^[13] is located along Rookwood Road in this suburb.

Yagoona railway station is on the Bankstown line of the Sydney Trains network. A number of bus services link Yagoona to Bankstown and Parramatta. Yagoona is located some 5 – 10 minutes from Bankstown Central Business District and about 10 – 15 minutes from Parramatta CBD.

The Hume Highway cuts through Yagoona and is the main road access for Yagoona to Liverpool and Sydney City; and Rookwood Road connects south to Stacey Street/Fairford Road (Entrance to the M5), and north to Silverwater Road (Access to the M4). A 30-metre pedestrian bridge costing A$2.3 million^[14] linking the side footpaths of Hume Highway was built in 2006, primarily to ensure easy and safe access travel in this area for the students of Yagoona Primary School. Lifts are located at each end to ensure easy access for those with disabilities. The construction of the bridge was funded by the Government of New South Wales. The bridge will also help streamline Hume Highway traffic by removing the previous set of traffic lights.^[15]