As of the census of 2000, there were 2,015 people, 813 households, and 573 families residing in the town. The population density was . There were 2,183 housing units at an average density of . The racial makeup of the town was 97.42% White, 1.14% African American, 0.40% Native American, 0.10% Asian, 0.15% from other races, and 0.79% from two or more races. Hispanic or Latino of any race were 0.79% of the population.

There were 813 households, out of which 27.4% had children under the age of 18 living with them, 60.4% were married couples living together, 7.1% had a female householder with no husband present, and 29.5% were non-families. 24.5% of all households were made up of individuals, and 13.0% had someone living alone who was 65 years of age or older. The average household size was 2.46 and the average family size was 2.94.

In the town, the population was spread out, with 22.7% under the age of 18, 6.7% from 18 to 24, 25.8% from 25 to 44, 27.2% from 45 to 64, and 17.6% who were 65 years of age or older. The median age was 43 years. For every 100 females, there were 99.5 males. For every 100 females age 18 and over, there were 96.7 males.

The median income for a household in the town was $37,569, and the median income for a family was $43,068. Males had a median income of $32,554 versus $23,333 for females. The per capita income for the town was $19,522. About 6.2% of families and 10.2% of the population were below the poverty line, including 13.2% of those under age 18 and 7.1% of those age 65 or over.

Communities and locations in Lyme

  • Ashland Flats Wildlife Management Area – A conservation area by the northern town line.
  • Chaumont – A village at the shore of Chaumont Bay on NY-12E. The village is on the south side of the Chaumont River, which empties into Chaumont Bay at that location.
  • Chaumont Bay – A large bay of Lake Ontario, entirely within the town, enclosed by Point Peninsula and the mainland.
  • Cherry Island – An island southwest of Point Salubrious.
  • Clines Point – A location on the eastern side of Point Peninsula.
  • Fir Island – A small island near the tip of Point Salubrious.
  • Herrick Grove – A lakeside hamlet located on the south side of Three Mile Point, northwest of Chaumont village.
  • Horse Creek – A stream flowing past the south side of Chaumont.
  • Independence Point – A peninsula projecting into Chaumont Bay southwest of Chaumont village.
  • Isthmus-Flanders Road – Area that transitions between the mainland and Point Peninsula.
  • Long Point – A location on the northeastern shore of Point Peninsula.
  • Long Point State Park – A state park on the northeastern side of Point Peninsula.
  • Point Peninsula – A peninsula connected to the remainder of the town by a narrow isthmus, called "The Isthmus."
  • Point Peninsula – A hamlet on the southeast shore of Point Peninsula on County Road 57. Union Hall and United Methodist Church were added to the National Register of Historic Places in 1990.