From 1854 until 1890, Seattle's water was provided by wells, springs and private water companies. A public waterworks was created by City Charter Amendment in 1875. However, Seattle was served primarily by small private water companies for the next decade and a half. In 1888, prompted by a tenfold population increase during the previous decade, Seattle's mayor and city council called for an election to decide if the city should own and operate its own water system.

Shortly before the election, the "Great Seattle Fire" of June 6, 1889, destroyed the entire 64-acre business district. A major contributor to the widespread destruction was the lack of water available from the patchwork of private water suppliers. The vote on establishing a municipally-owned water system was approved by a resounding 1,875 to 51 margin.

In 1890, a U.S. Supreme Court decision allowed municipalities to issue bonds secured by future revenues. Shortly thereafter, Seattle issued $845,000 in bonds and purchased two private water companies -- the Spring Hill Water Company and the Union Water Company -- both of which pumped water from Lake Union and Lake Washington. In 1895, Seattle residents again voted to approve revenue bonds, this time to construct the Cedar River water system. Water first flowed from the Cedar River into Seattle's system on January 10, 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. This new system had a capacity of 23.5 million gallons per day.

The system was administered by the Superintendent of Water under the auspices of the Board of Public Works. In 1905 the Department of Lighting and Water Works was created. Five years later, the Water Department became a separate entity. In 1909, a second pipeline was added, providing an additional 45 million gallon per day capacity to meet the water needs of a fast-growing Seattle. The next water supply source was not added until 1964, when the South Fork of the Tolt River began supplying north Seattle and the Eastside. In 1987, the first ground water source was added to the system when two wells in the Highline Well Field began operation. A third well was added in 1990.

In 1997 the Water Department was consolidated with the utilities of the Engineering Department to form Seattle Public Utilities.