According to the United States Census Bureau, the village has a total area of 2.7 square miles (7.1 km²), of which, 2.7 square miles (6.9 km²) of it is land and 0.1 square miles (0.2 km²) of it (2.92%) is water.
West Dundee was hemmed in from development for years. The river formed a natural eastern barrier. To the north and west, the D. Hill Nursery, founded in 1855 by William Hill, specialized in fruit trees. The business grew to include evergreens, some of which were sent to Chicago for the World's Columbian Exposition in 1893. Expanding to 900 acres, the nursery survived the Great Depression by running a cattle feed operation that continued through World War II. Some of the thousands of seasonal workers traveled to work from Chicago by electric car, while the majority lived on the nursery grounds.
In the 1950s a segment of the Hill property East of Illinois Route 31 was sold and turned into the Highlands subdivision, which was annexed into West Dundee in 1956. The community also annexed property west of Illinois Route 31 in 1957, Royal Lane in 1960, and the Old World subdivision in 1966. The nursery eventually sold all of its land and moved to McHenry. Plans for the Spring Hill Mall on Hill's land began in 1973 and the project was completed in 1980. The 1.1 million-square-foot mall's retail sales boosted West Dundee's economy and created an estimated 1,600 jobs by 1982. New subdivisions were built to the west of Spring Hill. The remaining land south of Illinois Route 72 had been separately incorporated as Sleepy Hollow in 1958.
Over the years there have been efforts to merge West with East Dundee, the village just across the Fox River. A 1956 referendum was approved by East Dundee but rejected by West Dundee. West Dundee approved a 1962 referendum, but East Dundee rejected it. Each town's retention of individuality dates back to their early days, when West Dundee's Scottish and English heritage kept it apart from its German neighbors.
There were 2,059 households out of which 37.0% had children under the age of 18 living with them, 59.4% were married couples living together, 7.8% had a female householder with no husband present, and 29.4% were non-families. 24.3% of all households were made up of individuals and 8.3% had someone living alone who was 65 years of age or older. The average household size was 2.64 and the average family size was 3.18.
In the village the population was spread out with 28.0% under the age of 18, 7.4% from 18 to 24, 34.0% from 25 to 44, 22.0% from 45 to 64, and 8.5% who were 65 years of age or older. The median age was 35 years. For every 100 females there were 94.5 males. For every 100 females age 18 and over, there were 89.1 males.
The median income for a household in the village was $62,540, and the median income for a family was $78,007. Males had a median income of $54,338 versus $36,111 for females. The per capita income for the village was $30,674. About 2.9% of families and 3.7% of the population were below the poverty line, including 1.4% of those under age 18 and 9.6% of those age 65 or over.