The Grassy Hill Lighthouse, situated at the top of Grassy Hill, is also the site of a lookout which gives an impressive 360 degree view of the Cooktown area. The site can be accessed by a road which is a bit steep in places, or, for those who enjoy a bit of physical exercise, it is only about a 15 minute walk.

Cook named this hill "Grassy Hill" due to its lack of vegetation.  The old photographs displayed at various places throughout the town show that there were hardly any trees on the hill during the early pioneering days.  It is claimed that this was because the local Aboriginal people regularly burned the hill to flush out game.  As a result of this practice being stopped because of the danger of fire to housing, thick bush now covers the entire hill.

The lighthouse was brought to Cooktown from England in 1885 and began operating the following year.