Its name originates from lithium oxide (Li2O) or "lithia," which is found in the stream water pumped to the park.

The area which now comprises the entrance to Lithia Park was the site of Abel Helman and Eber Emery's flour mill, the first building in what is now the city of Ashland—established in 1852.

Additionally, Smith, Emery and Company were retained to do the necessary plumbing to pipe the "healthful" mineral waters into the park.

Plantings by the WPA under Chet Corry (appointed superintendent in 1937) improved the landscaping of the park entrance.

Financial and maintenance strains caused many features of the park to decay, and vandals destroyed several landmarks.

The park was named by the American Planning Association as one of 10 Great Public Spaces in America in 2014.