A sub-district of the city's Gentilly District, its boundaries as defined by the City Planning Commission are: Lake Pontchartrain to the north; the Industrial Canal to the east; Leon C. Simon Drive, Elysian Fields Avenue, New York Street, the London Avenue Canal, and Allen Toussaint Boulevard to the south; and Bayou St. John to the west.

Land was reclaimed from Lake Pontchartrain in an Orleans Levee Board project which began in the 1920s and was completed in the 1930s, creating the space now occupied by the neighborhood.

The Pontchartrain Beach amusement park, originally opened within the present-day Lake Terrace subdivision in the 1920s, moved to newly reclaimed land at the foot of Elysian Fields Avenue in the 1930s and remained a popular attraction through the early 1980s.

During World War II, the area included important war-effort facilities such as Higgins Industries shipyards, Camp Leroy Johnson, and a Naval air base called NAS New Orleans.

After Katrina, the lakefront appeared as a slender, curiously undamaged, and almost wholly recovered zone adjacent to the much-lower-lying and hard-hit Lakeview and Gentilly neighborhoods on the other side of Allen Toussaint Boulevard/Leon C. Simon Drive.

A large traffic circle that meets Paris Ave. East and West Lakeshore Drive, was built shortly after construction of the Lake Terrace.

The City Planning Commission defines the boundaries of Lake Terrace/Lake Oaks as these streets: Lake Pontchartrain, the Industrial Canal, Leon C. Simon Drive, Elysian Fields Avenue, New York Street, the London Avenue Canal and Allen Toussaint Boulevard and Bayou St.