The name "Mountain Lake" is usually attributed to early settler William Mason. The city's official website recalls, "the first white settler to the area, William Mason, found a shallow 900-acre lake with three islands. The two smaller islands just broke the water's surface. The third much larger, higher island looked to Mason like a mountain rising from the lake. He named the lake Mountain Lake and the island Mountain Island." The top of the island was covered with trees, and could be seen for miles around, thus serving as a landmark to early settlers. The story continues that in 1871 the St. Paul & Sioux City Railway had selected "Midway" as the name of the village, since it was located midway between Saint Paul, Minnesota and Sioux City, Iowa. However, Mason insisted that the village being platted be named "Mountain Lake".