In 1925 the breed attained homogeneity following a cross-breeding with the Fox Terrier and the Airedale Terrier. The Lakeland Terrier is suitable for fox and rabbit hunting and for sheep predator control.

In the Lake District of the UK, the mountainous, rocky terrain is unsuitable for hunting fox on horseback and foxes were hunted on foot. It has been suggestd that the lakeland terrier's great stamina derives from running all day with the hounds, unlike his close cousin, the fox terrier, who would have been carried in a saddle bag to be released only when the fox had gone to earth.

The working dog version of the Lakeland is often know as the Fell Terrier or Patterdale Terrier.