Like Irvine and Valencia, Westlake Village was planned in the 1960s as a prototype for a new way of living: a "city in the country" with its own economic base, carefully developed residential neighborhoods, and ample green space. It sits on land once belonging to the 12,000-acre Albertson Ranch, purchased by the American-Hawaiian Steamship Company in 1963. The company envisioned a 70,000-person planned community on this land straddling the Los Angeles and Ventura County line, and hired architectural and planning firm A. C. Martin and Associates to come up with the master plan.

The firm, which was very well known for its many designs in downtown Los Angeles and elsewhere, planned a city of cohesive neighborhoods with interconnected greenbelts that preserved hundreds of existing mature oak trees. The titular and much-heralded lake, which was constructed as part of the development, served as a focal point for the community and was surrounded by commercial as well as residential areas. All utilities ran underground to avoid landscapes crowded with overhead lines, and the industrial sections of the community were segregated into distinct areas to ensure a pleasant living environment.

Each neighborhood had its own small commercial zone, with a larger business district in the town center. Westlake Village had fulfilled the initial goals of its master plan by 1968, at which time the Ventura County portion was incorporated as part of the City of Thousand Oaks. In 1981, the Los Angeles County portion was incorporated as the City of Westlake Village. A. C. Martin's master plan for Westlake Village is a strong illustration of the 1960s ideals of the New Town, which would incorporate the best of urban and suburban environments into a human-scaled experience.