The distillery was built in the early 1830s next to an ancient windmill (whose remains still exist today). Before 1837, it was called Invernettie, and in that year the distillery was converted into a brewery. In 1875, the Scottish Highland Distillery Co. converted it back into a distillery, but the company was liquidated five years later. The distillery then changed hands several times and was closed on numerous occasions, including between 1925 and 1937. In 1937, it was acquired by Seager Evans, a London gin distiller. This company had established the Strathclyde Grain Spirit Distillery in 1927 and, in 1936, acquired the Long John blended whisky brand. In 1956, Seager Evans was sold to Schenley Industries Inc. of New York, providing better and faster capital injection as blended Scotch expanded globally. The ownership of Glenugie was transferred to Long John Distilleries Ltd, and the distillery was completely refurbished, adding two new stills and shell-and-tube condensers, which doubled its production capacity. The company also established the Tamdhu distillery in Speyside and built the Kinclaith distillery in Strathclyde. In 1962, the company purchased the Laphroaig distillery and was renamed Long John International in 1970. In 1975, it was sold to Whitbread & Company Ltd. In January 1990, the company's spirits interests were acquired by Allied Lyons for £454 million. However, Glenugie had already been closed for seven years by that time. Shortly after 1983, the site was split and sold to two North Sea oil engineering companies, and the original buildings were demolished.

The distillery's main building has an unusual cast iron frame structure. The distillery only ever had one pair of stills.