Karri Lake was established when the former Quinninup Mill was purchased for the development of a residential estate in 1983. The developer purchased not only the mill but all the land owned by Millars, including the townsite which was subdivided into a strata development.
Part of the land owned by the mill, was natural forest for logging, including a portion of Little Quinninup Brook, and surrounding acreage. The developer proceeded to subdivide this area into lifestyle blocks for sale to the public.
Little Quinninup Brook had previously been dammed for use as a trout farm by the owner of a property fronting the brook. The dam wall was heightened and strengthened and the water used in the township and the new development. The new dam was called Karri Lake and the residential estate was advertised with the lake being the main drawcard, with water activities such as fishing and canoeing being permitted.
The developer negotiated with the WA Water Corporation to provide a filtration plant and handed ownership of the lake to the Water Corporation. Karri Lake provided water for the needs of the growing township as new houses were built on the Karri Lake Estate. In 2000, the Water Corporation banned all activities in or on the lake. This continued until 2014 when the lake ceased to be used to supply water to the township.
The Quinninup Community Association began negotiations with Water Corp and the Shire of Manjimup to have the lake reassessed as available for recreational activities as it is no longer a drinking water asset. These negotiations are ongoing.