The town was designed by civil engineer Charles Bank Mott like a suburban with gravel streets, electricity, street lights, reticulated water, stormwater drainage, and sewerage.

[9] When the project commenced, the town was informally known as the Stanley River township.

The Queensland Government decided to call the town Somerset after local pastoralist Henry Plantagenet Somerset, the Member of the Queensland Legislative Assembly for Stanley from 1904 to 1920.

[14][15]The dam was being built as part of a program of providing employment during the Great Depression.

During World War II construction of the dam was halted to enable the workers to be redeployed on war-related work, such as the Cairncross Dockyard with work resuming in 1948.

[9] St Mark's Anglican Church at First Avenue (27°07′04″S 152°33′03″E / 27.1177°S 152.5508°E / -27.1177; 152.5508 (St Mark's Anglican Church (former))) was dedicated on 30 August 1936 by Archbishop William Wand.

[16][17] The church building was the former St Mark's Anglican Church of Fernvale which, having closed in 1934, was purchased by the Queensland Government for £50, relocated to Somerset Dam, renovated and re-roofed.

It is operated by the Somerset Regional Council and continues to be used for local events and as a wedding venue.