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The largest AVA of Santa Barbara wine country, the Santa Ynez Valley was designated in 1983. The southeastern boundary of the Santa Ynez AVA approaches Lake Cachuma; the northeastern boundary stops at the San Rafael Mountains and cuts west, roughly following the ridge top of Purisma Hills. Its westernmost boundary ends prior to the town of Lompoc, and the southern boundary extends along the ridgeline of the Santa Ynez Mountains.

The Santa Ynez Valley ranges from the extremely cool climate of the western portion to the considerably warmer interior valley of its eastern portion. The soils are largely of marine origin, but due to the complex geologic history of the area, there are more distinct soil types found in this growing region. The eastern portion of the AVA produces some of the finest Bordeaux and Rhone bottlings of Santa Barbara wine country. In contrast, the western portion (Santa Rita Hills) produces exceptional cool climate varietals like Pinot Noir and Chardonnay.