The name Manipal comes from two local words mann and palla. Mann means "mud" and palla means "lake" in Tulu language. The town derives its name from the Manipal Lake.
The lake is 400 m in diameter. Located in the middle of the town, it is a scenic tourist spot. The lake was formed due to the removal of clay soil from the area which was used by tile factories in order to make tiles. The depression then resulted in the formation of a lake as rainwater collected in it. The lake is a popular tourist attraction and offers boating facilities as well. It is one of the most beautiful places in the town.