Located 1.5 kilometres (0.93 mi) west of the town of Laidley, the dam was developed to increase the capacity of the existing Lake Dyer, a natural lake adjacent to Laidley Creek, a tributary of Lockyer Creek.

The dam was named after the Queensland politician Bill Gunn and is managed by SEQ Water.

[2] Bill Gunn Dam suffers from high drawdowns and summer evaporation which together with phosphate fertilizer creates significant blue green algae problems.

[2] A single concrete boat ramp and some facilities for visitors, including campers, are available at a lakeside caravan park which is managed by the local council.

[5] The poor water quality means that fish caught in the dam may, at times of an algae outbreak, be a health hazard if eaten.