Constructed on the site of a quarry used to expand Garden Island in the 1930s, the location was used during World War II as a boom net maintenance and storage area.

In the 1930s, the decision to construct a graving dock and landbridge connecting the naval base at Garden Island to the mainland at Potts Point led to the quarrying of this hill for sandstone, which altered the geography to a sheer cliff-face and near-water level plateau.

[1] The location reverted to a storage site after the conclusion of World War II, but in the early 1960s was earmarked as the future base for the RAN's minesweeping forces: six ex-Royal Navy Ton-class minesweepers and a Clearance Diving Team, with the base commander to simultaneously hold overall command over these forces.

[1] At commissioning, there were minimal facilities available: the River class frigate HMAS Culgoa was relocated to the northern wharf in December 1952 and used as a barracks ship until June 1971.

[3]: 275 In 1994, the same year the Huon class project began, it was recognised by the RAN that the facilities at Waterhen needed to be upgraded.