Between the quarry and San Antonio River to the east was an 11-acre tract of land owned by Mrs. Emma Koehler, widow of Pearl Brewery owner Otto Koehler. Mrs. Koehler donated this land to the City in 1915 for a public park and its location immediately adjacent to the abandoned quarry posed a challenge for City Parks Commissioner, Ray Lambert.

Lambert ultimately came up with the idea of a lily pond which eventually became the Japanese Tea Garden. With plans from his park engineer and no money, Lambert was able to construct the Garden. Between July 1917 and May 1918, Lambert used prison labor to shape the quarry into a complex that included walkways, stone arch bridges, an island and a Japanese pagoda. The garden was termed the lily pond, and local residents donated bulbs to beautify the area. Exotic plants were provided by the City nursery and the City Public Service Company donated the lighting system. The pagoda was roofed with palm leaves from trees in City parks. When completed, Lambert had spent only $7,000. In 1919, The American City magazine reported that "the city of San Antonio has recently completed a municipal lily pond and a Japanese garden which we believe are unique."

Lambert continued to improve the garden, and in 1920, at the base of the old cement kilns, a small village of houses was constructed, termed by the San Antonio Express as "another dream of the artist of the Lily Pool, Ray Lambert, Commissioner of Parks." The village was designed to be a tourist attraction for the manufacturing and sale of Mexican arts and crafts and an outdoor restaurant. It is not known how long the village operated. At the entrance to the gardens, artist Dionicio Rodriguez replicated a Japanese torii gate in his unique style of concrete construction that imitated wood.

In 1926, at the City's invitation, Kimi Eizo Jingu, a local Japanese-American artist, moved to the garden and opened the Bamboo Room, where light lunches and tea were sold. After Mr. Jingu's death in the late 1930s, his family continued to operate the tea garden until 1942, when they were evicted because of anti-Japanese sentiment during World War II. A Chinese-American family operated the facility until the early 1960s, and it was known as the Chinese Sunken Garden. In 1984, the area was rededicated as the Japanese Tea Garden in a ceremony attended by the Jingu's children and representatives of the Japanese government.

In recognition of the Tea Garden's origin as a rock quarry that played a prominent role in the development of the cement business, as well as its later redevelopment as a garden, the site is designated as a Texas Civil Engineering Landmark, a Registered Texas Historic Landmark, and is listed on the National Register of Historic Places.

The garden underwent a renovation beginning in May 2007 in which the ponds and waterfall were repaired, along with adding a recirculation system to provide a safe habitat for new Koi and aquatic plants. This phase, which cost $1,587,470, was a public-private partnership with the City of San Antonio, the San Antonio Parks Foundation and the Friends of the Parks. A grand reopening ceremony was held on March 8, 2008, which was attended by the Lambert family, descendents of Park Commissioner Ray Lambert, as well as numerous members of the Jingu family, including Bertha Jingu Enkoji, who was born in the Jingu House and lived at the garden as a child.