Ousteri (or Oussudu) Lake is the largest lake in Pondicherry, of around 800 acres of water located approximately 6 km. west of the town. For over a decade, environmentalists have tried to get the lake protected as a sanctuary. The Bombay Natural History Society, has designated Ousteri an Important Bird Area (IBA) of India - over 20,000 birds belonging to over 40 species used to reside or winter at Ousteri. The Asian Wetland Bureau declared Ousteri one of 93 significant wetlands in Asia; and many of the birds recorded at Ousteri, including Spot-billed pelicans, Eurasian Spoonbills, Darters, Painted Storks, and Black-headed (or White) Ibis, are on the International Union for Conservation of Nature and Natural Resources (IUCN) Red List of Threatened Species. (Ousteri view from Pondy to Thirukanur Road)

The eastern and northern foreshore of the lake lies in Tamil Nadu and the rest in Pondicherry.

The lake was created during the Vijaynagar rule and was reconstructed by Anandarangapillai at the time of his administration during the French regime to irrigate the nearby lands leased to him and provide drinking water to the city.

"In the French rule a filtering water station was constructed in Muttrapalayam " – tells Mr. Soundararajan, the promoter of Nalla Lake Village "and the water reached Pondicherry by gravity and was known as Muttrapalayam water." As Pondicherry has developed into a more industrial city not much agriculture is carried out and therefore the lake has abundant water during all the seasons.