Unlike the other ponds in the Parklands that are fed by stormwater, Lily Pond is fed by a natural, underground spring in Lachlan Swamp.
The water in this pond is usually clearer than other ponds in the Parklands for two reasons. Iron pyrites present in the soil oxidise, releasing sulfur dioxide and causing the spring water to be slightly acidic and therefore clearer. The water it is also filtered up to the surface through sand, contributing to its clearer appearance.
Its small islands, vegetated with papyrus, provides important habitat for purple swamphens, black swans and the clamorous reed warbler. Its water brims with aquatic invertebrates such as dragonfly nymphs, water boatmen and aquatic earthworms during warmer months.