The lake was discovered by Europeans on 12 March 1838, when encountered by the overlanding party of Joseph Hawdon and Charles Bonney, who were the first to drove livestock from New South Wales to Adelaide. Hawdon named the lake that day after Bonney, while recording that the local indigenous people named it 'Nookampka'. At that time it was a fine sheet of water, but was dried out and muddy three years later in 1841 when the police expedition led by Thomas O'Halloran passed by on its way to rescue other overlanders at the Rufus River.

When Charles Sturt passed by in 1844 on his expedition into the interior of Australia, he surveyed Lake Bonney for the first time, as well as the creek connecting it to the River Murray. James Collins Hawker, then residing at Moorundie, assisted Sturt’s surveyor Poole. In appreciation, on 2 September 1844 Sturt named the creek Hawkers Creek, but it was never officially adopted and is known as Chambers Creek.

Pioneering settlers sometimes cropped the dry lake bed in times of low river flows. In 2007, to conserve water in the Murray system, a regulator was installed. The regulator cut the lake from the river system and the lakes' level dropped to its lowest level since 1914 and salinity increased markedly with loss of wildlife and also recreational water activities. The regulator was removed in December 2010 and this, with wet summer and winter rains restored it to normal levels by April 2011.

Name duplication within South Australia for both the lake and its feeder creek sometimes causes confusion, because there is also Lake Bonney located in the Limestone Coast region, and Chambers Creek in the Flinders Ranges.

Since the 1950s the lake has been a popular venue for holidaymakers, being used for a wide range of water sports, particularly sailing and water-skiing.