High Quality Content by WIKIPEDIA articles! Tumwater is a city in Thurston County, Washington, United States. It lies near where the Deschutes River enters Budd Inlet, the southernmost point of Puget Sound. The population was 12,698 at the 2000 census. Thurston County, which includes the cities of Lacey, Olympia and Tumwater, has a population of 224,100. Tumwater was founded next to the falls of the Deschutes River at the south end of Puget Sound as New Market in 1846 by a group of pioneers led by Michael Simmons and George Bush. It was the first American settlement on Puget Sound. These early settlers were attracted by the water-power potential from the falls, the easy access to Budd Inlet for shipping, and the open prairie land in the area for cattle grazing.