Waddouring was first mentioned by surveyor/explorer A.C. Gregory and his two brothers on the 7 August 1846. Then in 1869 Surveyor General Roe sent 21 year old John Forrest out on a long expedition to the north east in search of the lost Leichhardt expedition. In his journal, Forrest reports striking the track from Goomalling to Waddouring and as far east as Yarragin. Waddouring became known very early as a watering place by the nomadic pastoralists, shepherds, and sandalwood pullers.

In 1868, H.J. Twine, a farmer from the Avon Valley took up a 5,000 acre pastoral lease which embraced Waddouring. Leases were not always held for the full term and were frequently relinquished, sometimes to be taken up again afterwards or transferred to another grazier. Records show that the lease at Waddouring was held by the following farmers up until the opening of the district for agricultural purposes.

• 21 March 1868 — H.J Twine (5000 acres)
• 6 January 1877 — Daniel Connor (5000 acres)
• 5 February 1879 — Daniel Connor expanded the Waddouring lease from 5000 acres to 20,000 acres
• 30 April 1887 — Butterly Bros (20,000 acres)
• 12 January 1893 — E.C Shenton (20,000 acres)

Mr J.M. Drummond leased a large area around Waddouring and ran it as a sheep station. He farmed the land when it was thrown open for selection in 1910. A road was constructed through Waddouring providing access to land further north. Mr J.M. Drummond made several requests in 1913 to the Ninghan Road Board to have this road closed, and be permitted to erect two gates. The Ninghan Road Board encompassed the present day Shires of Mt Marshall, Trayning, Wyalkatchem, Koorda and Nungarin.

The Mt Marshall Progress Association wrote to the Roads Board opposed to the closure of the road as applied for by Mr Drummond. At the next meeting the Board gave permission for two gates to be erected across the road through Waddouring estate.

At the following meeting Fred Weyman, a farmer south of Bencubbin, attended to represent the settlers of Mt Marshall who were opposed to the granting of the gates and road closures. The board rescinded their previous decision and agreed that the gates would not be approved at this meeting.

As the district grew, a three acre site was donated by Mr Drummond for the location of the first school in Mt Marshall which opened in April 1917. The site is situated at the base of Waddouring rock, adjoining the public road near the irrigation station and Waddouring Well.

At the Ninghan Roads Board meeting on the 10 March 1923, the question of obtaining a water supply at Waddouring was left in the hands of the member for the North Ward (Mr Walker) and the Secretary to make enquiries to the Water Supplies.

On 31 of May 1923 the Mt Marshall Road Board was gazetted as a separate Board with its new southern boundary running along the southern edge of the current Waddouring Dam Reserve.

In the middle of 1926, J. Cunningham, Minister for Water Supplies, spoke to a meeting of settlers in the district to explain the projected Waddouring Water Scheme.

Resumption of land required for the Waddouring scheme was first discussed in 1927. According to the relevant file, just before the opening of the scheme approximately 415 acres were resumed for catchment and road diversions.

In 1927, twenty men arrived to work on the scheme. The local Bencubbin General Store owner, Earnest Charles Monger, had opened a branch store at Waddouring which was much appreciated by the workers. Past resident Mrs Brewster Jones recalls that her father in law, Fred Gilham, a pioneer farmer in the district, supplied eggs, butter, milk and mutton to the men on the job at this time.

On the 26 October 1929 the Waddouring Rock catchment dam opened and water was available for the townsites of Bencubbin and Gabbin. An additional 32 acres of land was resumed in 1930 for a small auxiliary reservoir.

A pumper was stationed at the dam to ensure that water was pumped from the catchment to the towns and farms connected to the scheme. Over the years the network of connections to the scheme grew and on the 1 March 1957 the dam received supply from the Mundaring Weir pipeline.

Waddouring Dam became a prominent place for Mt Marshall residents to come together for picnics. In 1979 the Mt Marshall & Districts Agricultural Society held a picnic celebration in September as part of the 50th show celebrations which had been held in Bencubbin the day prior. Public access to the reserve became restricted over the following years.

In 1961 Public Works Department planned to complete extensions to the dam to increase its capacity to 36 million litres.

In 2017, Water Corporation completed the construction of a 6.25 million litre tank at the northern end of the Waddouring catchment. Once completed, the water from the dam catchment was no longer being used to provide scheme water to the district. On the 1 July 2020, the Shire of Mt Marshall entered into a lease with Water Corporation for the majority of the reserve. The Shire has developed the site to once again allow locals and visitors back onto the reserve.