Cossacks founded ostrog in 1638, 90 kilometers (56 mi) southwest of the modern town. The ostrog's name "Verkhoyansky", in general, translating from Russian into the Upper Yana, derived from its geographical location on the upper reaches of the Yana River. In 1775, it was moved to the left bank of the Yana River to facilitate tax collection. Between the 1860s and 1917, the town was a place of political exile.

Verkhoyansk is notable chiefly for its exceptionally low winter temperatures and some of the greatest temperature differences on Earth between summer and winter. Average monthly temperatures range from −45.4 °C (−49.7 °F) in January to +16.5 °C (61.7 °F) in July. Mean monthly temperatures are below freezing from October through April and exceed +10 °C (50 °F) from June through August, with the intervening months of May and September constituting very short transitional seasons. Verkhoyansk has an extreme subarctic climate dominated much of the year by high pressure. This has the effect of cutting off the region from warming influences in winter and together with a lack of cloud cover leads to extensive heat losses during the cooler months.