It is believed that Nainital figures in some ancient myths of India. In the Manas Khand of the Skand Puranas, Nainital Lake is called Tri-Rishi-Sarovar, hinting at the story of three sages (or rishis), Atri, Pulastya and Pulaha, who, upon finding no water in Nainital, dug a large hole at the location of the present day lake (sarovar = lake) and filled it with water from the holy lake Manasarovar in Tibet. According to lore, a dip in Naini Lake, "the lesser Manasarovar," earns merit equal to a dip in the great lake. It is also believed that The Naini Lake is one of the 64 Shakti Peeths, or religious sites where parts of the charred body of Sati (Parvati) fell on earth while being carried by Lord Shiva. The spot where Sati's eyes (or Nain) fell, came to be called Nain-tal or lake of the eye. The goddess Shakti is worshipped at the Naina Devi Temple on the north shore of the present day lake.

The Kumaon Hills came under British rule after the Anglo-Nepalese War (1814–16), but the hill station town of Naini Tal was founded only in 1841, with the construction of the first European house (Pilgrim Lodge) by P. Barron, a sugar trader from Shahjahanpur. In his memoir, he wrote: "It is by far the best site I have witnessed in the course of a 1,500 miles (2,400 km) trek in the Himalayas."In 1846, when a Captain Madden of the Bengal Artillery visited Naini Tal, he recorded that "houses were rapidly springing up in most parts of the settlement: some towards the crest of the limitary ranges were nearly 7,500 ft (2,300 m) above sea level: the rugged and woody Anyarpatta (Anyar-patt - in Kumaoni means - complete blackout. The reason for this nomenclature by the localites was because there were minimal sun rays due to its location and dense forests) was being gradually planted and that the favourite sites were on the undulating tract of forest land which stretched back from the head of the lake to the base of China and Deopatta (Camel's Hump). The Church, St. John in the Wilderness, had been built Soon the town became a health resort favoured both by British soldiers and by colonial officials and their families trying to escape the heat of the plains. Later, the town also became the summer residence of the Governor of the United Provinces. The present king of Kumaon is Raja Mahendra Chand of Lamakhet (Pithoragarh), he is married to Rani Gita Chand of Rina and has three childrens (Rajkumari Aakanksha Chand, Rajkumari Mallika Chand, Rajkumar Aryan Chand).

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