Lightwater formed part of the parish of Windlesham and is not recorded by name in any surviving documents until John Aubrey, writing in the late 17th century, mentioned it as 'Light Water Moor'. Aubrey told of a sweet-smelling plant known locally as 'inhabitants gole' or 'gale', but which we know today as 'bog myrtle', which grew in the area. 'People used it to put in their chests among linen ...', wrote Aubrey. The existence of this plant here is a good pointer to the nature of the countryside around Lightwater, and it probably explains why it was such a sparsely populated place before the introduction of modern drainage methods.
The modern version of the name 'Lightwater', perhaps meaning 'the place of clear water', first appears in a parish survey of 1748. The population was restricted to a few small farms and on the heaths the area was well-known for its gipsy encampments. It also had a reputation for harbouring highwaymen and one of them, a gentleman named Duval, is said to have lived in a cottage at Lightwater.
The development of Lightwater really began during the period 1895 to 1905 and there has been steady growth ever since. In the succeeding decades of the 20th century Lightwater acquired all the trappings of an integrated village. Further houses were built, particularly in the 1920s, and other estates have been laid out since the Second World War.
All Saints' Church was opened in 1903. It was paid for by a local resident and a porch and vestry were added in 1939. In that same year Lightwater Primary School was opened, a sure sign of a growing community. In 1971 the M3 Motorway was opened adjacent to the village and in 1977 Lightwater acquired a bypass.