A conceptual model for the co-development of lakes and lunettes is proposed, based on field observations of recent dune lakes on Cape York, northern Queensland, Australia. The model is tested and supported by stratigraphical investigation of relict lake-shore barriers in southeastern Australia at Lake George and Lake Victoria, New South Wales and a significant reevaluation of the Lake George embankments is proposed. The model applies to shallow lakes (initially 1-2 m deep) subject to strong uni-directional winds. In these lakes, wind-generated waves can entrain sediment from the lake bed. The resultant migration of sub-aqueous beforms leads to the development of shoals, and eventually an emergent barrier. Initial development of a complete barrier is hindered by the return circulation which, because of the shallow depth, takes place in the horizontal rather than the vertical plane. Once a partial barrier is formed, exchange between the two segments of the lake decreases markedly and a complete barrier can form. Upward growth of the barrier by normal coastal foredune growth can subsequently occur, leading to the formation of a lunette. In the early stages of development, the material for this is supplied from erosion, and deepening, of the lake bed. As the lake gets deeper there is increasing potential for the accumulation of fines in deeper water during less windy periods. This provides a source of clays which may subsequently be deflated onto the lunette.