The first European to explore the area was the indomitable Surveyor General John Septimus Roe who passed through the area south of the present townsite in 1848 and named Mt Madden, the most prominent granite outcrop in the area.
Roe was on an expedition to survey and explore the south-east interior of Western Australia. He was accompanied by two soldiers from the 95th regiment, two members of the Surveyor General's Department, and an Aboriginal guide named Souper.
To gain some insight into the kind of experiences that Roe and his party must have had there has been an excellent brochure, the Roe Heritage Trail, produced which covers 23 km of the route he took in the last days of October 1848. The trail starts at Roe Hill near the Old Newdegate Road which is to the west of the main Ravensthorpe–Lake King road. It was here that Roe's party split with one half moving towards Lake King while the other half travelled towards Mt Madden.
The two groups joined up at the base of Mt Madden which Roe named after Dr Richard Madden, Western Australia's Colonial Secretary. Mt Madden is now a popular picnic location and the climb to the top of the outcrop, which is 386 m above sea level, is quite easy and affords excellent views over the surrounding countryside.
Roe's reports on the countryside he visited (he pushed further west on this journey and returned along the coast from Esperance) did not engender any great rush for settlement.
Even the establishment of Holland's Track from Broomehill to the goldfields in 1893 (the tracks made by the drays and wagons can still be seen between Lake Grace and Newdegate (ask for directions from the local Shire Office) could not encourage people to move into the area in significant numbers.
In 1909 the surveyor, F. S. Brockman, named Lake Grace after his wife, Grace Bussell. Shortly afterwards settlement occurred in the area but it wasn't until 1914 that Lake Grace got its own school. An Australian Inland Mission Hospital was built in the town in 1925 and around this time the tiny wheatbelt townships of Newdegate (1924), Varley (1928) and Lake King (1928) were established.