The Lake Rotoaira Trust was established as a result of an investigation of title of Lake Rotoaira by the Māori Land Court. That investigation followed years of consternation amongst Ngāti Tūwharetoa due to disputes with non-Tūwharetoa recreational anglers over the fishing rights in the lake and the failure of the Department of Internal Affairs to successfully prosecute these recreational anglers for fishing in the lake.

Under an Order in Council from 1922, it was envisaged that only Ngāti Tūwharetoa would have fishing rights in the lake. However, ambiguous phrasing in the Order in Council and related Regulations cast some doubt over the exclusivity of this right. This failure to protect what had long been assumed by Ngāti Tūwharetoa to have been an exclusive right led to much consternation, and a large hui was held in November 1937 to discuss the issue. While Regulations relating to fishing in Lake Rotoaira were tightened in 1938 to confirm the exclusive right of Ngāti Tūwharetoa to fish in the lake, one of the outcomes of the 1937 hui was for Ngāti Tūwharetoa to establish clear ownership of the lake through the Native Land Court process. In November 1937 the application for title investigation of Lake Rotoaira was lodged with the Native Land Court by Ngāti Tūwharetoa.

The Crown opposed this and subsequent applications until 1943, when the objection was withdrawn on the condition that any decisions on Lake Rotoaira should not be taken as a precedent on the ownership of beds of inland waters. No further action in the case occurred until 1946, when Ngāti Tūwharetoa wrote to the Chief Judge of the Māori Land Court asking for the decision in the Lake Rotoaira case. At the Māori Land Court hearings in March and June 1947, Ngāti Tūwharetoa urged that the Lake Rotoaira title investigation commence.

In May 1955 the Whanganui District office of the Māori Land Court noted that it was ready to continue with the title investigation. Between 1955 and 1956, the title of Lake Rotoaira was investigated by the Māori Land Court having hearings at Tokaanu and Whanganui. This investigation was followed by the decision of the Māori Land Court firstly awarding freehold title and then on 6 December 1956 vesting the lake in eleven trustees each of whom represented a hapū of Ngāti Tūwharetoa under section 438 of the Māori Affairs Act 1953.

The original trustees and the eight Rotoaira hapū were:

Lake Rotoaira and Part Lot 1 Deposited Plan 31506 is now a block of Māori freehold land including the lake bed comprising of 1,541.693 hectares created by order of the Māori Land Court on 12 April 1956 (the Land).