Sanatorium Lake is an interesting body of water that sits among the dense eucalyptus trees and fern gullies in the cool climate of the Macedon region. This human-made lake was initially developed and put in place to provide water for a nearby sanitorium for tuberculosis patients, which unfortunately never even reached the stage of construction.

In 1899, a sanatorium was opened within the Macedon National Park, a short distance from where the lake now stands. This original facility took over the grounds of what was previously a private hospital. The aim of Sanatorium Lake was to provide water supply to the proposal of a newer, larger, and more scientifically advanced facility to treat the life-threatening infection of tuberculosis, which was much more common around this time. This cool mountainous area was chosen for such a facility due to concerns about the warm Australian summer climate affecting the recovery of those suffering from tuberculosis. 

Unfortunately, there was a significant lack of funding and a significant degree of local opposition directed toward the development of a new sanatorium. The plans to use the lake for the purpose of supplying the medical facility soon came to a halt. In 1910, the original sanatorium closed and was later destroyed by a forest fire, with a decision being made not to redevelop the site for this purpose.  

If it were not for the preservation and natural beauty of what remains at Lake Sanatorium, it is likely that the Macedon Sanatorium operation from 1899 to 1910 would be long forgotten from the memories of locals and visitors to the area. Even though it was never used for its intended purpose, the lake serves as a unique picnic spot and area to observe the many species of wildlife in the area. The Macedon Ranges is a diverse ecological area and there are over 150 species of native birds, many of which can be seen and heard around Sanatorium Lake, which is known for its special reflections of the towering pine and eucalyptus trees. With the cool air in the middle of this mountainous region, one can imagine why such a site was initially chosen to help patients suffering from tuberculosis recover.