In Clearwater County, the dam is located approximately four miles (6 km) northwest of Orofino and impounds the Dworshak Reservoir for flood control and hydroelectricity generation.

[7] The proposal for Dworshak Dam originated in a 1953 USACE survey of the lower Snake River drainage basin for suitable sites to develop reservoir storage and hydroelectric power generation.

[5][10][11] The dam was controversial from the start,[12] because it would block fish migration and its reservoir would flood a large portion of the winter range of elk in the Clearwater River basin.

Excavation of keyways in the canyon walls to provide future foundations for the concrete commenced in 1966, and continued through 1968.

The diversion tunnel was closed on September 27, 1971, allowing the reservoir to begin filling, and the last concrete was poured on the dam crest on January 27, 1973.

The hatchery is located on the small peninsula of land between the North Fork and the main Clearwater River directly above their confluence.

[20] The hatchery has a capacity of 6,000 adult fish, and releases about 3.4 million juveniles into the river system each year.

Discharge rates from the dam only increase significantly during high water summers, when flooding requires the opening of the spillways.

[28] Each winter, the level of Dworshak Reservoir is drawn down an average of 155 feet (47 m) to prepare for the North Fork's annual freshet, which once could reach more than 100,000 cu ft/s (2,800 m3/s) after a heavy snowmelt.

The reservoir is required to maintain a minimum of 700,000 acre-feet (0.86 km3) of winter flood-storage space, and dam releases are operated so that water levels reach a maximum of 1,570 feet (480 m) in July.

Water releases from Dworshak are also timed to benefit Pacific salmon and steelhead migration in the Clearwater, Snake and Columbia Rivers.

However, the large annual drawdown of the reservoir causes boat ramps and marinas to be out of reach for months each year and an unsightly "bathtub ring" to be visible along the shoreline.

A study by the University of Idaho calculated that this mode of operation causes the loss of between $4.5–5.9 million of tourism revenues each year.

[34] The creation of a slackwater pool along 53 miles (85 km) of the North Fork formerly assisted logging operations in the region, although the scale of the lumber industry has decreased significantly since the 20th century.

This is in part because of the implementation of a late-summer flow augmentation scheme that requires greater drawdowns of the reservoir, putting log-handling facilities well above the water level, and also because of the development of backcountry logging roads that allow more efficient transport by truck.

[35] It has been suggested that some of Dworshak's flood control space be shifted to Grand Coulee Dam in northern Washington to provide increased water for flow augmentation; this would carry the added benefits of improving recreation on the lake.