The inn was the centerpiece of a grander vision. Judge Lester Still developed the surrounding property as a recreation retreat called Still Park, which included camping areas, cabins, horse trails, tennis courts, and a warm saltwater swimming pool. The inn opened in May 1907 with 15 sleeping rooms upstairs and the large gathering room downstairs, oriented so that its front faced east toward Penn Cove's protected waters. Daily steamers from both Seattle and Everett brought passengers, supplies, and mail to the dock at the inn's front door. Parts of the original dock and its stone stairway are still visible from the current pier. Judge Still is also credited with bringing the first automobile to Whidbey Island, a vehicle now displayed at the Island County Historical Society Museum. Before the Deception Pass Bridge was completed in 1935, the only way to reach Whidbey by car was by ferry.

The inn's history is a catalog of rural reinvention. Over its first half-century, the building served variously as a general store, a girls' school, and a post office, adapting to whatever the community needed in an era when island buildings had to be versatile. Through each transformation, the log walls and stone fireplace remained. The property returned to offering overnight accommodations in 1946, resuming its original purpose after nearly four decades of alternative use. The original wood floors are still visible in both the lobby and the bar. The gathering room became the dining room, the kitchen, and Judge Still's Tavern. The evolution was not a renovation so much as a reversion: the building remembering what it was built to be.

Penn Cove is one of the most sheltered harbors in the San Juan Islands region, a deep indentation in Whidbey Island's northern coast known for its mussel farms and calm water. The Captain Whidbey Inn sits at the cove's western end, just outside Coupeville, the second-oldest town in Washington State. The inn's position on the water meant that for its first three decades, the primary mode of arrival was by boat. The steamship era defined the inn's identity: it was a waypoint, a place where travelers paused between the mainland cities and the island's interior. That character persists. Guests today can still arrive by boat at the inn's dock during summer months, and the views from the rooms upstairs look out over Penn Cove toward the same waters that the steamers once crossed.

The inn now houses two suites and ten regular rooms in the original building, four waterside cabins with private decks and kitchens, and the 13-room Lagoon Building overlooking the lagoon lawn. Electricity and Wi-Fi have been added over the years, but the fundamental character of the place has not changed. The Madrona logs have darkened with age but remain structurally sound, their post-and-beam construction unchanged since Fisher and his son raised them. Float planes land at the dock in summer. The original cabins are gone, replaced by the waterside units, but the inn's relationship with the water remains its defining feature. In an era when historic properties are often gutted and rebuilt behind preserved facades, the Captain Whidbey Inn is genuinely old: original logs, original stone, original floors, and the same fireplace that warmed the first guests in 1907.