The lake was officially named in the early 1950s; however, the name was well established before then. It was most likely named after Nels J. Anderson and his family who homesteaded on the south-east corner of the lake. Nels Anderson was born in Norway in 1873, and moved with his family to North Dakota, before coming to Canada in 1923. The family settled in the Wembley area in 1928. Local residents also refer to Anderson Lake as Grass Lake because of an abundance of tall grass in and around the lake. (see also Grass Lake)

Approximately 33 km north-west of Grande Prairie.