The Water Department was created in 1910 from the former Department of Lighting and Water Works. It managed the water supply for the city and most of King County. In 1997 the Water Department was abolished, and its functions were absorbed by Seattle Public Utilities.

Efforts to use Cedar River as a source of water for the City of Seattle were initiated in the 1890s by City Engineer R H Thomson. Water from the Cedar River Watershed was first delivered in 1901. Water was diverted by a dam at Landsburg, and then was channeled into a newly-completed 28.57-mile pipeline. This pipeline carried water to the Volunteer Park and Lincoln reservoirs on Capitol Hill in Seattle, which were also built at the time. In 1909, a second pipeline was built, and a third in 1923.

In response to increased needs by a growing city, the Tolt River was explored as a source of water in the 1950s and the south fork of the Tolt began providing a new source of water supply to north Seattle and the east side beginning in 1964.

In 1962, landowners signed the Cedar River Watershed Cooperative Agreement, which set up a process of land transfers that resulted in Seattle's complete ownership of its watershed lands. This led to further procedures for fire protection and public access control. In 1996, the USDA Forest Service ceded its watershed land to the City, which gave Seattle final and sole ownership of the entire watershed.