Prior to 2009, no rodents had been recorded on Lizard Island other than introduced Black Rats that arrived on at least two occasions since 1990 but did not establish populations. A native rat, Melomys capensis, was recorded from South Island in the Lizard Island Group in February 2010 and that species is probably also present at North Direction Island.

In October 2009, people suddenly started seeing small-mammal tracks on several beaches at Lizard Island. It took a few months for anyone to spot an animal and it was then tentatively identified as the native Water Rat, Hydromys chrysogaster, based on size, colour, and its furry tail with a white tip. That identification was confirmed after a frozen specimen was sent to Queensland Parks and Wildlife Service. The population appeared to increase steadily to about 2012 then stabilise. Individuals are seen frequently at night.

Water Rats are good swimmers and are known from many islands around the Australian coast.