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The neighborhood of Dyker Heights lies within the boundaries of the then Dutch town of New Utrecht settled in 1657. The area that is now known as Dyker Heights was not developed in the 17th or 18th century because the land was too sloped for farming; it remained common woodland until the mid 19th century. The trees of this forest were used by the townsfolk as a source of firewood and construction material. When the agricultural industry of New Utrecht changed from the farming grains to the cultivation of market garden produce, the trees were cleared for tomatoes, cabbages, and potatoes, among other produce. The first house built at the top of the hill (what is now 11th Avenue and 82nd Street, at about 110 feet (34 m) above sea level) was built in the late 1820s by Brigadier General René Edward De Russy of the US Army. De Russy was a military engineer who built many forts in the US – from the Canada–US border and the eastern seaboard to the Gulf of Mexico and the Pacific coast – including Fort Hamilton in Brooklyn. Since this was the tallest natural point in southwest Brooklyn, he built his homestead here – it afforded a clear view of the harbor and its defenses, especially Fort Hamilton which was complete by November 1831. De Russy died in 1865 and his wife, Helen, sold the property in 1888 to Jane Elisabeth Loveridge and Frederick Henry Johnson.

According to the Brooklyn Eagle, Frederick Johnson did "much toward developing the locality in which he resided. He was the author of the original New Utrecht Improvement Bill, and an ardent advocate of the annexation of the Town to this City." The Town of New Utrecht was annexed to the City of Brooklyn on July 1, 1894. On January 1, 1898, the City of Brooklyn was annexed to the City of New York. Involved with real estate, Johnson was probably aware of the real estate pressures on and potential of the real estate in New Utrecht. With this in mind, he most likely purchased the De Russy estate with the intention of building an upscale residential neighborhood similar to Bensonhurst by the Sea, built by James D. Lynch in 1880–1890 in the Bath Beach section of New Utrecht. At that time, the Real Estate Record claimed Bensonhurst by the Sea was "the most perfectly developed suburb ever laid out around New York." The restrictions placed upon the property made Bensonhurst by the Sea "a model settlement, where some of the most refined, intelligent and cultured of New York City and Brooklyn's citizens have built their homes." In 1895, Johnson, very much aware of the successful Bensonhurst by the Sea, built three homes. His home was on the southwest corner of 11th Avenue and 82nd Street (across the Avenue from the home of his mother), Albert Edward Parfitt's home was on 82nd Street next to Johnson's, and the last, closest to Tenth Avenue, was the home of Arthur S. Tuttle who was Assistant Engineer of The Water Supply of The City Works Department of The City of Brooklyn. Parfitt was the architect of these three homes. Johnson's house burned down before 1900, Parfitt's was demolished by a developer in 1928 and replaced with seven, run of the mill, fully detached, single family homes, and Tuttle's house was remodeled over 10 years ago and clad in bright white and sky blue brick. In April 1898 sales were still very strong. "Dyker Heights still holds its lead among the suburban sections in building operations, over forty houses having been erected there during the past year and there are fully twenty more houses about to be built." One of its many advantages was the location, which according to the Brooklyn Eagle, "is one of the finest in Greater New York, commanding an extensive view of water from Sandy Hook to the New Jersey Palisades, with Staten Island and the shores of New Jersey directly in front." Still more praise in February 1899, "Dyker Heights has been one of the most successful and the most rapid in growth of any of the suburban settlements, over one hundred dwellings, costing from $5,000 to $25,000 each, having been erected there within the last two years."

In September 1899, The Wall Street Journal even reported on the advantages of the development, recommending it to "the busy man of Wall Street" because of "its magnificent transportation facilities it can be reached via the Thirty Ninth Street Brooklyn Ferry and Eighty Sixth Street Nassau Line in 45 minutes." In addition, the article claimed that "the 45 minutes' trip between Dyker Heights and Wall Street by water and rail is as invigorating as the Dyker Heights climate is healthy living. The rare opportunities afforded by Dyker Heights to the wealthy and to those in moderate circumstances are due largely to the energy, enterprise and good taste of its founder, Mr. Walter L. Johnson." The article also explained the exclusiveness of the property, which can be seen in "its massive stone piers with heavy wrought iron lamps and scrolls" that adorn the entrances. Johnson set very high standards for the community: the Wall Street Journal explained "the property is carefully restricted against all nuisances and no building can be erected upon a plot of less than 60 feet (18 m) in width by 100 feet (30 m) in depth, and each building must cost at least $4,000 and stand well back from the street." The society
was able to acquire the house for $11,000, roughly half the market value, and opened the Dyker Heights Home for Blind Babies on 1 November 1906. Cynthia W. Alden, Mary C. Seward, and other society officers worked with the New York City Board of Education to establish the first public kindergarten for
blind children at the home in 1907. The original building is gone, but the work begun in Dyker Heights provided a legacy of significant reforms in the public education of blind children within New York and other regions of the United States. One of the many focal points of the neighborhood was the Dyker Heights Club, which started in October 1896. Early in the history of Dyker Heights, Johnson continually purchased consecutive tracts of land until the boundaries of Dyker Heights stretched from 79th Street in the north, roughly 86th Street in the south, Tenth Avenue to the west, and about 300 feet (91 m) east of 13th Avenue to the east. However, the boundaries of the Neighborhood of Dyker Heights are now defined by the Dyker Heights Post Office on the northwest corner of 13th and 84th Streets; along its northeast edge runs Bay Ridge Avenue; 16th Avenue is its southeast boundary; Fort Hamilton makes its southwest border; and Interstate 278 is the northwest limit.

Based on data from the 2010 United States Census, the population of Dyker Heights was 42,419, an increase of 3,087 (7.8%) from the 39,332 counted in 2000. The racial makeup of the neighborhood was 70.2% White, 0.1% African American, 0.0% Native American, 27.1% Asian, 0.0% Pacific Islander, 0.1% from other races, and 1.0% (430) from two or more races. Hispanic or Latino of any race were 5.9% of the population. The entirety of Community Board 13 had 142,075 inhabitants as of NYC Health's 2018 Community Health Profile, with an average life expectancy of 83.1 years. This is higher than the median life expectancy of 81.2 for all New York City neighborhoods. Most inhabitants are middle aged adults and youth: 20% are between the ages of 0–17, 34% between 25 and 44, and 25% between 45 and 64. The ratio of college aged and elderly residents was lower, at 7% and 15% respectively. In 2018, an estimated 19% of Bay Ridge and Dyker Heights residents lived in poverty, compared to 21% in all of Brooklyn and 20% in all of New York City. One in twelve residents (8%) were unemployed, compared to 9% in the rest of both Brooklyn and New York City. Rent burden, or the percentage of residents who have difficulty paying their rent, is 49% in Bay Ridge and Dyker Heights, slightly lower than the citywide and boroughwide rates of 52% and 51% respectively. Based on this calculation, as of 2018, Bay Ridge and Dyker Heights are considered to be high income relative to the rest of the city. By 1940 Dyker Heights was inhabited by a majority of people of Italian descent many of whom helped establish the Roman Catholic Shrine Church of Saint Bernadette (ca. 1935) on 13th Avenue between 82nd and 83rd streets. Dyker Heights Boulevard, also known as 13th Avenue, contains many Italian owned businesses. Dyker Heights Boulevard is the only commercial district in Dyker Heights and is the de facto center of the neighborhood. Around 11th Avenue between 60th and 70th Streets lies a Coptic speaking Egyptian community. St. George Coptic Orthodox Church serves the community. The church was established in 1973. However, since the 2000s, there has been a slow growing influx of Asian residents into the neighborhood and New York City Department of City Planning released a 2020 census data showing for the first time in history, the Asian population in the neighborhood has surpassed the White population. The Asian population residents are between 30,000 and 39,999 while the remaining White population residents are between 10,000 and 19,999. The 2020 census data also showed a small, but significant Hispanic population residents of 5,000 to 9,999.

Dyker Heights is now most famous for its Christmas lights and decorations erected each year by its residents. It has been called "Con Ed's warmest heartthrob", the "undisputed capital of Christmas pageantry", and the "king of the Christmas lights". Christmas lights are now the core of the Dyker Heights identity, because the whole community, not just one home or one block, participates. Formally, the lighting and Christmas decorations begin on the last Thursday of November (Thanksgiving) and they remain until the first days of January, with mid December being the days most visited by tourists. Although in which December the lights began is unclear, newspaper reports and tours of the area suggest it started sometime in the 1980s. In 1985 one Lou Singer began running tours (Singer's Brooklyn) through the most elaborately light parts of Bensonhurst, Canarsie, Bay Ridge, and Dyker Heights where one could find "designer lighting". Since those initial 1980 reports, the lights of Dyker Heights have become increasingly popular with New Yorkers as newspaper articles, news programs, documentaries, and remotes were created. In 2000, Conan O'Brien filmed a remote for Late Night with Conan O'Brien in Dyker Heights. A PBS televised documentary "Dyker Lights" was produced in 2001 as an insight into the neighborhood with stories involving the Christmas celebration lights.

Early on, the two most noted homes were on 84th Street, between 11th and 12th Avenues, directly across from one another. The home of Lucy Spata with her Santa theme at 1152 84th Street and that of Alfred Polizzotto with his Nutcracker motif at 1145 84th Street. In December 1998, the Spatas' home was covered in lights, illuminated soldiers and choirboys, and other Christmas figures. The inside is decorated with 50 motorized dolls, miniature villages and many gifts. Outside Santa, played by her nephew, greets children and others who pass by. The white mansion, owned by Alfred Polizzotto and his family, was adorned with a pair of 29 feet (9 m) high wooden soldiers which stood guard and wave their arms. The front lawn had rearing horses and a quartet of dancers. In 1988, Polizzotto was diagnosed with lymphoma, which was successfully treated the following year. To celebrate his triumph, Polizzotto mounted the display the following year and until his death. In 2001, Polizzotto died; however, his family continued the tradition in his honor for a few years, until stopping in 2020. In 1996, the Casos, who moved to Dyker Heights in 1995 and have since relocated, had Midwood artist Carl Oliveri design Charles Dickens' "A Christmas Carol", which included 29 life size figures on their front lawn at 1062 84th St.

The neighborhood is part of New York's 11th congressional district, represented by Republican Nicole Malliotakis as of 2021. It is also part of the 22nd State Senate district, represented by Democrat Andrew Gounardes, and the 46th and 49th State Assembly districts, represented respectively by Democrats Mathylde Frontus and Peter J. Abbate Jr. Dyker Heights is located in New York's 43rd City Council district, represented by Justin Brannan. Dyker Heights is served by Brooklyn Community Board 10.

The NYPD's 68th Precinct is located at 333 65th Street. The 68th Precinct ranked 7th safest out of 69 patrol areas for per capita crime in 2010. as of 2018, with a non fatal assault rate of 23 per 100,000 people, Bay Ridge and Dyker Heights' rate of violent crimes per capita is less than that of the city as a whole. The incarceration rate of 168 per 100,000 people is lower than that of the city as a whole.

The firehouse for the New York City Fire Department (FDNY)'s Engine Co. 284/Ladder Co. 149 is located at 1157 79th Street.

as of 2018, preterm births and births to teenage mothers are less common in Bay Ridge and Dyker Heights than in other places citywide. In Bay Ridge and Dyker Heights, there were 95 preterm births per 1,000 live births (compared to 87 per 1,000 citywide), and 11.4 births to teenage mothers per 1,000 live births (compared to 19.3 per 1,000 citywide). In 2018, this population of uninsured residents was estimated to be 15%, which is higher than the citywide rate of 12%.

Dyker Heights is covered by ZIP Code 11228. The United States Post Office's Dyker Heights Station is located at 8320 13th Avenue.

The Brooklyn Public Library has two branches in Dyker Heights. The Dyker branch is located at 8202 13th Avenue, near 82nd Street. The one story structure, opened in 1974, was designed by Daniel Laitin and features a blue green glazed facade. The McKinley Park branch is located at 6802 Fort Hamilton Parkway, near 68th Street. The McKinley Park location was originally a "deposit station" with a small circulating collection, which opened in 1911. The library moved to the current building in 1959, and the structure was restored in 1995.

The center of Dyker Heights is not served directly by the New York City Subway, but its neighboring communities are; It can range from a 15 20 minute walk to a station in Bay Ridge, Borough Park or Bensonhurst depending on where in the neighborhood you are. Bay Ridge is served by the BMT Fourth Avenue Line , with stations at Bay Ridge Avenue, 77th Street, 86th Street and 95th Street. The far south end of Borough Park is served by the BMT Sea Beach Line , with stations at Fort Hamilton Parkway and New Utrecht Avenue. Bensonhurst is served by the BMT West End Line , with stations at 79th Street, 71st Street and 62nd Street. Several local New York City Bus routes and two express routes serve Dyker Heights; the routes are
Dyker Heights is accessible by car via the Belt Parkway as well as the Interstate 278 (Verrazano Narrows Bridge to Staten Island, Gowanus Expressway, and Brooklyn Queens Expressway).