The history of Rainbow Lake is one that is over 100 years old. Mr. James, the owner of the Signal Point Inn (now Alexian Village) constructed a dam a short 15 minute hike away from the Inn and that is where Rainbow Lake was formed. The lake was 1,200 by 200 feet across, with an average depth of 15 feet. There were even donkeys that guest could hitch a ride on to the lake. Although the glory days of Rainbow Lake are long gone it is still a beautiful place to hike and cool off atop Signal Mountain.