It formed from the alluvial deposits of nearby Sucker Brook. Limestone from the brook's bedrock dissolved in its waters forms rare lime carbonate oncolites, known locally as "water biscuits", on its shores. Rises in the lake level following the damming of Canandaigua Outlet have reduced the island to a small portion of its former land. The state and local activists have worked together to shore it up against erosion and prevent it from disappearing.
The island is located roughly 500 feet (150 m) south of the mouth of Sucker Brook and 600 feet (180 m) southwest of the end of the docks at the north end of the lake in Canandaigua. Although both those locations are in the city, the island itself is outside its boundaries, in the town of Canandaigua. The surrounding waters, like much of the shallow north end of the lake, are no deeper than 25 feet (7.6 m) it is sometimes possible to wade to it from shore.
It is roughly 145 feet (44 m) long by 55 feet (17 m) wide, for a total area just under 8,000 square feet (740 m2). Several mature deciduous trees grow on the island; the shoreline is marked by large piles of flat stones. Its terrain is level, barely rising above the water level. A 10-short-ton (9.1 t) granite boulder is located in the middle.
Canandaigua Lake, like all the Finger Lakes, was formed at the end of the last Ice Age about 11,000 years ago, from the glacial meltwater flooding the deep glacial moraines that typify the terrain of western Central New York. Squaw Island began to form as a sandbar created by the interactions between the sediments carried in Sucker Brook and the counterclockwise currents along the lakeshore. Prior to European settlement, the island had two long gravel spits projecting to the north and southwest; the adjoining delta of the brook would have made the island easy to reach from land without boating to it, especially at times of year when the water was low.
The first humans known to have settled in the region, the ancestors of the Iroquois Native American tribes, did not live on the island, even though it was larger than it is now. However, flint arrowheads and other artifacts found on the island suggest it was used for hunting waterfowl and perhaps deer. It may also have been used as a staging area for Iroquois warriors in the area mobilizing against the Sullivan Expedition of 1779, during the Revolutionary War.