The creek was named after the Alta California land grant Rancho Rinconada de Los Gatos ("Corner of the Cats"), which itself was named for the cougars and/or bobcats that roam in the mountains above the present-day town of Los Gatos. The first settlers, a Spanish family arriving in 1839, were scouting for a homestead in the area when they heard mountain lions roaring and fighting. While frightened, they also recognized it was a good omen, for it meant water couldn't be far away. They discovered the creek and built a home in what is now Vasona Lake County Park. On Hare's 1872 map the creek was called "Arroyo de Los Gatos" and Zachariah Jones called it "Jones Creek" at the time he laid out the town he called Jones Mill (which later became the now submerged Lexington, California). Forbes Mill was established by James Forbes along the creek in the 1850s; the town of Los Gatos was subsequently built around the mill.