One of the main attraction for the tourists of Kodaikanal is the Kodai lake which is at a distance of .3km from the bus stand. In 1863, Vera Levinge, a former District Collector of Madurai settled in Kodaikanal after his retirement, was a man of resources and creative ideas. By spending his own money he converted the marshy land with several streams into a lake by constructing a strong bund and brought boats from Tuticorin. It is reported that the foreign resident's even used to swim in the lake.

The lake is situated at 10 deg 14' n latitude and 77 deg 28' longitude at an elevation of 2285m above sea leavel and it looks magnificent with star shaped glittering water, in the midst of evergreen lush slopes. The hills eceive the rainfall during North-East Monsoon months of October, November and December. The lake is spread over 60 acres and surrounded by fine tarred road of 5 km length, the maximum depth prior to 1962 was 11.5m but it is now about 9m due to siltation. The average depth is 3.0m. The boat club provides boats for hire. There are luxury boats also. The famous Carlton hotel is facing the lake and the hotel is also having their our boats for their customers.

Today lakhs of tourists walk around, sail on, ride on horses and cycles and admire. Fishing also can be done obtaining permits from Inspector of Fisheries. Ponyrides by children and adults around the lake are part of Kodai Holiday.