The Wakarusa Museum itself came about when talks of the damming of the Wakarusa river began circulating. But the rumors were not taken seriously until the Corps began buying up property in the 1960s, forcing out families who had used the land for their farms for years. This in turn caused the citizens of the area to form the Clinton Lake Landowners Association. Concerned that if all of the land was bought up, the history of the land would soon be lost, the CLLA took a special interest of a brick building located on a hill east of Clinton. The house was acquired by the Corps in 1972 and was scheduled for demolition.
The CLLA took notice of this and over 200 members signed a petition to send to the Corps to try and save the house from demolition and to maybe use it as a museum, citing that the valley was a hotbed for history, including that of the Underground Railroad and the Bloomington Guard. But the Association's hard work apparently paid off in 1973, when the Corps agreed that the home, which was the former home of Colonel J.C. Steele, would be renovated and later opened to the public as a museum. But the house was still dismantled in 1981 and the Association had to place their museum in a restored milk shed in 1983. Work is still going on to this day to build a more modern building to house the museum.