In 1869 the South Australian Governor Sir James Fergusson gave the Scottish name Lochiel to the site of this planned Government Town.

Salt has been harvested from the lake bed in summer months since 1881, providing employment and other economic benefits for many years.

[10][9] In 2011, about 270 million tonnes of lignite (brown coal) were estimated to be in a deposit north of Lochiel in seven seams from 70 to 110 metres underground.

The site was considered to be favourable because it lies only 6 km (4 mi) from the railway line to Adelaide, Darwin and Perth.

[11] In 1972 a local man, Gary Taylor, and his friends created a sculpture of rubber tyres and plastic in the shallows of Lake Bumbunga 2.4 km north of the town (33°54′09″S 138°10′05″E / 33.9026°S 138.1680°E / -33.9026; 138.1680), to be visible from the main highway.

There is speculation that by early-mid 2022 Lochiel will have another tourist drawcard added to the list of things to appreciate, and to help break up long drives on highway one.