The dam impounds Elephant Butte Reservoir, which is used mainly for agriculture but also provides for recreation, hydroelectricity, and flood and sediment control.

The construction of the dam has reduced the flow of the Rio Grande to a small stream for most of the year, with water being released only during the summer irrigation season or during times of exceptionally heavy snow melt.

The butte was said to have the shape of an elephant lying on its side, and its name has been applied to the area since before the dam's construction.

By the 1890s, water use in the upper basin was so great that the river's flow near El Paso, Texas, had been reduced to "a trickle in dry summers.

To resolve those problems, plans were drafted up for a large storage dam at Elephant Butte, about 130 miles (210 km) downstream of Albuquerque, New Mexico.

The site at Elephant Butte was chosen for those reasons and for its mountainous location, which created a natural basin for a reservoir.

It was eventually blocked by the U.S. Secretary of State "on basis of a technicality that the Rio Grande was arguably a navigable river and permission from the War Department was also needed."

For the next two years, surveyors and engineers undertook a comprehensive feasibility study for the project's dams and reservoirs.

The "Upper Camp" was built upstream and housed affluential and skilled workers, such as supervisors and engineers.

[2][10] It was expected that the dam would become the property of the local settlers once a water tax had reimbursed the government for the cost of construction.

[1][12] Historic resources from the era of construction of the dam, as well as from the New Deal era development of power generation and recreation facilities in the area, were recognized in the 1997 listing of a 2,443 acres (9.89 km2) area on the National Register as the Elephant Butte Historic District.