The major attraction in the Lake Grace area (apart from Mt Madden) is Lake Grace itself. Part of an ancient river system which probably flowed more than 20 million years ago it was reduced to a lake about 5 million years ago and gradual silting made it into the shallow lake which exists today.
The clearing of the land around Lake Grace at the turn of the century has resulted in the whole area experiencing long term salinity problems as the water table rises to the surface bringing dissolved salts with it. Entry to Lake Grace township from Dumbleyung involves crossing a narrow causeway across the lake which offers an excellent opportunity to observe the level of salination in the lake.
The area around Lake Grace is noted for the variety of small mammals including the western mouse, white tailed dunnart, Mitchell's hopping mouse and the ashy-grey mouse.