Long before modern development, the area that is now Lake Forest was part of the traditional homeland of Indigenous peoples of coastal Southern California, especially the Acjachemen (Juaneño) and Tongva/Gabrielino cultural spheres in the broader region. As with much of Orange County, Spanish colonization, the mission system, and later Mexican rule profoundly disrupted Native communities.
In the Spanish and Mexican eras, the land formed part of large ranchos, including Rancho Cañada de los Alisos. After California became part of the United States in 1848, ranching continued to dominate much of the area. Over time, ownership patterns shifted and agriculture, grazing, and rural landholding gave way to suburban development pressures connected to the rapid growth of Orange County in the 20th century.
Modern community development accelerated in the 1960s. Planned residential tracts were built around two artificial lakes, and the area became known as Lake Forest, though the larger unincorporated community was officially called El Toro for many years. The name El Toro was also associated with the nearby Marine Corps Air Station El Toro, which had major economic and geographic influence on the region during the Cold War period.
Lake Forest incorporated as a city on December 20, 1991. In 2000, voters approved changing the city name from El Toro to Lake Forest, reflecting the more commonly used neighborhood identity. Since incorporation, the city has expanded municipal services, parks, and business development while adapting to regional changes such as the closure and redevelopment planning of the former El Toro air base. In recent decades, Lake Forest has evolved into a mature suburban city with a diverse population and a mix of residential, commercial, and light industrial land uses.