In 1867, Dr. Samuel Merritt donated 155 acres (627,000 m²) of dammed tidal water from the headwaters of Indian Slough; it became known as "Merritt's Lake" and later Lake Merritt.

Originally the "lake" was a tidal estuary formed where several creeks empty into San Francisco Bay. It has always attracted migratory birds, and in order to protect the birds from duck hunters, in 1869 the body of water was declared a National Wildlife Refuge, making it the first such refuge in North America.

The Lake Merritt Wild Duck Refuge became a National Historic Landmark on May 23, 1963.

Children's Fairyland is on the lake's shore in Lakeside Park.

A "necklace of lights" encircles Lake Merritt. Featuring 126 lampposts and 3,400 "pearly bulbs", the necklace was first lit in 1925. In 1941 the lights were dimmed due to World War II blackout conditions. After a decade long campaign, the lights were again illuminated in 1985.