It was named after astronomer C. Donald Shane in 1978, who led the effort to acquire the necessary funds from the California Legislature, and who then oversaw the telescope's construction.

Similar laser adaptive optics systems based on LAO have been installed on the University of California's two Keck telescopes in Hawaii.

[5] A 120 inch glass blank leftover from the Hale telescope was acquired, and ground to its figure at optical shops on the mountain.

[5] For Lick Observatory's first 55 years of operation, its astronomers relied on two telescopes built in the 19th century.

An adaptive optics system for the Shane was developed, utilizing an artificial star made by laser and a deformable mirror with actuators.

[6] The system could send light to a visible-light CCD or an infrared sensor (NICMOS III camera).