The easternmost segment of NY 254 was originally the northernmost portion of New York State Route 32B, which was designated in a 1930 renumbering of New York routes. The new designation, Route 254, was applied in the 1960s after an arterial was built in Queensbury. Route 254 is county-maintained by Warren County along its Quaker Road alignment, for which purpose it is designated County Route 47, County Route 70 and County Route 32B.
Soon after, the highway crosses Route 32 at a normal intersection, then County Route 79 (Boulevard) and NY 911E, where the county designation changes to CR 32B. Here, Route 254 turns east onto River Street, where control is given back to the state. The route passes into Washington County and enters Hudson Falls. It then continues southward for a short distance before terminating at a roundabout with U.S. Route 4 and New York State Route 196.
An alternate riverside route of NY 32 between Schuylerville and Hudson Falls was designated as New York State Route 32B in the 1930 renumbering. Within Hudson Falls, NY 32B entered on Main Street and continued west along the Hudson River's east bank on River Street to meet U.S. Route 4, which entered Glens Falls at the time via Boulevard and Warren Street. US 4 was extended south to East Greenbush by 1938, replacing NY 32B from Hudson Falls to Schuylerville. The former routing of US 4 in Glens Falls became part of an extended NY 32 (and thus NY 32B still connected to NY 32) as a result.
NY 32B remained unchanged up through the 1960s when a new arterial was constructed around the northern and eastern extents of Glens Falls. The roadway, designated NY 254, extended from Interstate 87 in the north to Warren Street (NY 32B) in the south. NY 254 then continued east to US 4 in Hudson Falls, replacing NY 32B. The short segment of Warren Street between NY 32 and NY 254, formerly the westernmost portion of NY 32B, is now New York State Route 911E, an unsigned reference route. New York State DOT has reserved the designation New York State Route 656 for what is now Route 911E, should the road be changed from a reference route to a touring route.