The lake was originally a private retreat owned by the Beaman family. Around 1890, the property was leased to William Gibbs McAdoo. He transformed Beaman's property into a pleasure park open to the public. It offered swimming, boating, a dance pavilion, and a penny arcade. The park connected to downtown Knoxville by a new electric streetcar line, the city's first. Referred to as Lake Ottosee and it was similar to other amusement parks and other destination attractions that were a common component of the era's streetcar-driven residential development. The area became known as Park City.
Overlooking the 14-acre lake, a Victorian-style Liberal Arts Building stood at the present site of the Jacobs Building. The original buildings no longer exist due to fires that occurred long ago. However, the marble gazebo still stands. It dates back to the 1910 Expo and is still used for musical performances in Chilhowee Park today.