North Island coastguard units had recommended the Navigator II equipment, which costs about $15,000.
The device sends a live image from the camera to a screen in the helm and, using variations in temperature, clearly shows people in the water, other boats, or floating debris.
Queenstown Coastguard board member Lyn Hamilton said the equipment had the potential to save lives and was "like searching in daylight".
The camera would prove beneficial to the organisation - and ultimately the community, she said.
"It will enable us to find people in the lake very quickly, even in pitch blackness - it's invaluable.
"There are no city lights here, no illumination, so this will provide safety for the crew, the boat and lake users."
Ms Hamilton said while Lake Wakatipu was picturesque, conditions could change dramatically and quickly.
Trust chief executive John Prendergast said the thermal imaging equipment was a vital search and rescue tool.
"If it saves just one life, it's certainly money well spent.
"It will definitely assist the Queenstown Coastguard in executing its duties effectively," he said.
Launched in March last year, the Queenstown Coastguard is the first dedicated marine search and rescue unit in the area, with 18 active members qualified or completing training.
"When the guys get called out to an emergency it reinforces their training and experience which is good, but you do hope that bell doesn't go off."
Ms Hamilton said the crew was now preparing for the "hectic" summer months and after determining the needs of the community, plans are under way to offer Coastguard Day Skipper courses this year.
"People will be getting out in their boats on the lake, which will certainly amp things up from our perspective.
"Tragic accidents in the area have highlighted the issue of water safety and people really appreciate the need for education," Ms Hamilton said.
Queenstown Coastguard was one of four Queenstown organisations to benefit from $33,498 in the latest funding round.
Other organisations in the Wakatipu area which received funding are: The Queenstown JazzFest Trust ($21,073), The Silk Tent Theatre Company Inc ($3000) and the Wakatipu Netball Association ($1925).
