The drainage basin for Blue Lake has very steep, forested slopes and is mostly part of the explosion crater left by the volcano's eruption.

The volcano lies within the Metolius River basin, which supports a wide array of plant life, large and small mammals, and more than 80 bird species.

A 2009 Oregon law designated the Metolius River basin as an area of critical concern, preventing large-scale development and protecting wildlife.

Despite having erupted at some point within the past 4,000 years, Blue Lake Crater is considered one of the least-known Holocene volcanoes in the Cascade volcanic arc.

The northern side of Blue Lake Crater's rim collapsed during eruptive activity, while the southern wall remains intact.

Part of the Elliott Corbett Memorial State Recreation Site, Blue Lake Crater supports an arts center named Caldera, as well as a resort.

"[6] Blue Lake also has a strange water chemistry, with samples collected in October 1972 by the Oregon Department of Environmental Quality showing increased conductivity owing to high concentrations of sodium and chloride ions, possibly as a result of inflow from hot springs.

[6] There were historically sockeye salmon runs in the lake and adjoining water systems, which ceased with the construction of the Pelton Dam on the Deschutes River in the 1960s.

[11] In May of each year, native plants and wildflowers start to appear, including early blue violets, larkspur, serviceberry, Sitka valerian, and western buttercups.

[11] Blue Lake Crater is part of the Oregon branch of the Cascade volcanic arc in western North America,[4] though it lies about 3 miles (4.8 km) to the east of the major crest.

[4] It fits into a greater geographic trend that includes Belknap Crater, the Cinder Pit volcano to the north, and a chain of spatter cones to the south,[13] which may indicate an underlying fault system or fractures.

[7] Its eruption less than 3,000 years ago makes Blue Lake Crater one of the youngest volcanoes in the Cascade Range,[15] and with the spatter cone chain nearby, it may also be the newest volcanic feature in the Santiam and McKenzie Passes region.

[21] It has a phosphorus pentoxide to potassium oxide ratio between 0.2 and 0.3, which is an indicator for distinguishing distinct magma types as the two chemical compounds act as incompatible elements except for late-stage crystallization.

Age progression is not clearly related to geographic distribution, though Blue Lake Crater and the spatter cone chain nearby mark two small eruptive centers in the eastern Santiam Pass area.

[26] Charred forest litter was found under cinders from the spatter cone chain near Blue Lake Crater and used to determine a minimum age of 1,330 ± 140 years.

[7] However, McKay (2012) shows that there is a strong chemical correlation between this layer and tephra from Blue Lake Crater as well as the Collier Cone volcano.

[27][28] Blue Lake Crater's eruption violently[29] broke through bedrock layers, producing basaltic volcanic bombs and cinders as well as a blanket of tephra that was deposited to the east and southeast,[4] reaching a maximum thickness of more than 16 feet (5 m).

[26] Possibly the most recent eruption in the Santiam and McKenzie Passes region, this event formed an elongated crater with steep walls but a low rim.

[17] It was part of a pulse of more than a dozen mafic eruptions during the late Holocene epoch in the McKenzie and Santiam Passes region between 4,500 and 1,100 years ago.

"[32] Blue Lake Crater is part of the Elliott Corbett Memorial State Recreation Site, named after a 22-year-old soldier who perished in November 1944 during World War II.

[9] The Cinder Pit volcano 1.5 miles (2.4 km) north of Blue Lake Crater was historically excavated for road metal.

[10] Located at 3,500 feet (1,100 m) above sea level, the arts center is 16 miles (26 km) to the west of the city of Sisters and encompasses 116 acres (0.47 km2) surrounded by the Deschutes National Forest.

[36] The Metolius Preserve area, operated by the Deschutes Land Trust, aims to protect habitat for fish, plant, and animal wildlife, including by preserving the Lake Creek waterway to sustain habitat for redband trout and nesting songbirds and reintroduce spring chinook salmon and sockeye salmon to the Deschutes River basin.

Land parcels are discontinuously public and private; Blue Lake's southern and western shores form part of the Elliott Corbett Memorial State Recreation Site.