Bay Lake is one of two Florida municipalities inside the Central Florida Tourism Oversight District (formerly the Reedy Creek Improvement District) which also includes Walt Disney World, the other being Lake Buena Vista.

Chapter 67-1104 of the Laws of Florida, incorporating the City of Bay Lake, was signed into law by Governor Claude R. Kirk, Jr. on May 12, 1967, the same day he also signed chapters 67-764 (creating the Reedy Creek Improvement District, or RCID), also known as the Reedy Creek Improvement Act, and 67-1965 (incorporating the City of Reedy Creek).

As fully described in Reedy Creek Improvement District, the city has always been controlled by the Walt Disney Company and has allowed them powers that other area attractions have not had.

The later Celebration, Florida was deannexed from the city and the RCID in 1994 so the Walt Disney Company would not lose control of the district.

The only landowners are wholly owned subsidiaries of The Walt Disney Company, rights-of-way for state and county roads, and five five-acre (2.0 ha) parcels owned by senior Disney employees to grant them voting power in the Reedy Creek Improvement District.

[7] The principal border that divides the cities of Lake Buena Vista to the east and Bay Lake to the west is the canal called Bonnet Creek, adjacent to Bonnet Creek Parkway.

Most of the attractions associated with the Walt Disney World Resort are actually located within the City of Bay Lake, including all four theme parks.

[8] The climate in this area is characterized by hot, humid summers and generally mild winters.

Because of Bay Lake statistics, legislators have to be careful not to use the words "maximum" and "average" in the computations used for the State of Florida's 2007 property tax reform debate.