[2] The name Watermillock is first attested in the early thirteenth century, in the form weþermeloc, with wethermelok first found in 1253.

The present-day form, beginning with water, is first attested in 1541, as Wattermannock, alongside a 1568 instance of Waltermannock.

The meloc element derives from the Common Brittonic word that would, if it were still found in modern Welsh, be spelled moelog, meaning "place associated with the Mell Fells" (whose own name comes from the word that survives in modern Welsh as moel "bare").

The first element of the name originated as the word wether ("castrated male sheep"), though was adapted over time through folk-etymology both to the personal name Walter and to the noun water.

Much of the high ground around the village was once deer forest, popular with the local gentry for hunting.