The Grand Order of the Water Rats was formed by the music hall comedian Joe Elvin (1862-1935) and the trick cycling performer Jack Lotto (1856-1944). They formed a syndicate with Richard Thornton (1839-1922), founder of the Empire Palace, Sunderland, and the owner of a successful trotting horse, to use profits generated by the horse to fund a social club and charitable organisation in aid of struggling music hall performers. They took its original name 'The Pals of the Water Rat' from that given one day to the horse when he was bedraggled by the rain, and held their first meeting in summer 1889 at The Magpie Hotel in Sunbury on Thames.

Elvin and Lotto issued medals to the founding members who were called Test Rats. This medal was owned by Test Rat Arthur Forrest (1850-1908), the music hall comedian and pantomime whose performance in skirts at London's Trocadero was reviewed by the critic of The Era, 29th June 1889 as rousing: 'the somewhat languid spectators to laughter by its excellent parody of the school of dancing in which white lace petticoats are duly displayed'.

Members of the society are presented with a smaller gold lapel badge of a water rat. Following the election of their first King Rat Harry Freeman in 1890, a King Rat is annually elected. In 1929 when Fred Russell was King Rat, their sister organisation The Grand Order of Lady Ratlings (GOLR) was founded, for female performers and wives, sisters and daughters of male performers. Russell's wife Lillian was installed as the first Queen Ratling. Notable music hall performers and King Rats include Dan Leno, Little Tich, Harry Tate, George Jackley, Bud Flanagan, Tommy Trinder, Les Dawson, Danny La Rue, Roy Hudd, Bert Weedon, Paul Daniel, Frankie Vaughan, Joe Pasquale and Nicholas Parsons. The charity continues to raise money for good causes by hosting shows, lunches, dinners and other events.