The land was purchased in 1954 by the Forestry Commission, when planting began as an experiment into silviculture on poor soils. This was driven by a need to replenish future timber crops after depletion for the second world war effort. The initial intention was to create a much larger forest right around the bay to Castletown, but this never came to fruition. The forest owners, Scottish Natural Heritage, acquired the land from the Forestry Commission in 1984.  A range of tree species was planted, but the forest is now dominated by sitka spruce and pines including lodgepole, corsican and mountain, with a few broadleaf species, such as sycamore.

Extensive, publicly accessible woodland is rare in this part of the world, and the physical development of the forest has been matched by its growth in importance as a recreational facility for locals and tourists, and as an educational resource. An EU-funded project in the late 1990s upgraded much of the evolving path network, and created an all-abilities trail that continues to be maintained.

There is an ongoing threat to the long-term future of the forest; as trees mature they reach a height that makes them vulnerable to windthrow, particularly in such an exposed location.

For the past 16 years Dunnet Forestry Trust (DFT) and its team of dedicated volunteers have been systematically restructuring the forest - clearing windthrown areas, felling ‘at risk’ stands, and restocking these and other areas with a mix of conifers and broadleaves. DFT also employs one part-time professional forester.

DFT’s objectives are to promote the conservation, restoration and improvement of the woodlands in the geographic area of Dunnet Bay, Caithness, for the public benefit, an important part of Scotland's heritage. In doing so, DFT advances education and provides recreational facilities and training in a variety of skills, benefiting residents of the Dunnet Bay area and the wider Caithness community.