Local knowledge is increasingly seen as a critical information source for environmental management and habitat restoration, particularly in Australia. To assess the reliability of this information source, community perceptions of the salinity history of Lake Ainsworth (New South Wales, Australia) were investigated. Lake Ainsworth is a coastal dune lake classified as ‘permanently’ freshwater, although diatom evidence indicates a saline phase that ended in the 1930s. Local accounts of the Lake's history rarely reached consensus and local perceptions frequently contrasted with alternate evidence, including that derived from historical maps and aerial photographs. Given there was an inconsistent and unreliable local perspective about a relatively simple environmental issue, calls for environmental management and restoration to be based on local priorities should be viewed with scepticism.