Of the five town-run onsen in Yuzawa, Yama-no-yu is probably the favorite of onsen aficionados. It is at the far end of town and sits on a hill with views down the valley. Under that hill is the source that feeds the onsen with its sulphuric spring water that is supposed to have beneficial effects for nerve pain, muscle pain and digestive problems. It was the discovery of that spring that led the founder of Takahan Ryokan to build his inn in that location and then for the town of Yuzawa to grow from there. Yama-no-yu is the oldest of the public onsen in the town and if the promo leaflet is to believed, was even enjoyed by the author of Snow Country, Yasunari Kawabata, when he was staying nearby. It's also popular with festival-goers during summer's Fuji Rock as a place to relax their msucles.
The onsen is a fifteen minute walk from the center of Yuzawa or a couple of minutes in a car. If you are driving, there are two car parks. The one at the bottom of the hill is the safe bet as the other one, outside Yama-no-yu, involves negotiating a very steep single track switch back turn that is no fun to negotiate, especially in winter. If you walk up the stairs from the bottom car park on a busy evening it is great fun to watch cars maneuvering with next to no space as they try to get in and out.
Yama-no-yu is small and rustic-looking. There is a tiny reception window as you enter where you hand in your ticket that will have you stooping, and then a small tatami resting area. The changing room and bath are equally dimensionally challenged. The real highlight of this onsen for the purists is the water, and as such, this onsen is popular. The locals love it and visitors actively search it out. There is a reason why a small public onsen, that fits about 6 people at one time, has an overflow car park. If you are heading here in winter after a day on the slopes be prepared to get intimate with your neighbor. This is public onsen at its very best.
If you forgot to buy omiyage of your trip there is also a small range of local dried produce for sale from reception.