Today, Waikouaiti is a retail trade and servicing centre for the surrounding district, which has sheep farming as the principal primary activity.

Hawksbury, 3 km southwest of Waikouaiti, has a cheese factory and shop, a swimming pool and housing developed from the old mental health institution, Cherry Farm.

Having already purchased large areas of land in the South Island (much of which was later declared to have been invalid) Johnny Jones sent settlers from Sydney, Australia in the Magnet to farm the district in 1840, eight years before the foundation of the Otago Association's settlement.

The wooden shingle roofed St. John's Anglican Church in Waikouaiti proper opened in 1858, was funded by Jones.

The high levels of lead were first detected on 18 December 2020 but the alert was emailed to a Dunedin City Council staff member who was on holiday.

[8][9] In response, Director-General of Health Ashley Bloomfield offered free blood tests to Karitane and Waikouaiti residents.

The Dunedin City Council also dispatched water tanks and staff to assist and reassure local residents.

"[10] On 9 February, the City Council distributed free fruits and vegetables to residents of Waikouaiti, Karitane, and Hawksbury due to concerns about eating crops irrigated with the contaminated water.

[11] Following lead scare, the Dunedin City Council announced on 11 February that it would drain a raw water reservoir and replace five kilometres of old pipes in order to reassure residents of Waikouaiti, Karitane and Hawksbury.

[12] By 10 March, the Southern District Health Board confirmed that 1,512 people had been tested, with blood test results indicating that nobody had a blood lead level requiring hospitalisation and that long term exposure to lead from the water supply was limited.

The name Waikouaiti is Māori, and is believed to come from phrases meaning "small bitter waters" (wai-kawa-iti) or "braided streamlets" (wai-koua-iti).