It lies almost entirely within Lincoln County, although the east end of the Fontenelle Dam and a tiny portion of the reservoir are actually in northwestern Sweetwater County.

Impounded by Fontenelle Dam, the reservoir acts primarily as a storage reservoir for the U.S. Bureau of Reclamation's Colorado River Storage Project, retaining Wyoming water in the state as a means of asserting Wyoming's water rights, with a secondary purpose of power generation.

Water from Fontenelle Reservoir is used in local industries such as mining and power generation.

[1] The reservoir has facilities for recreation, with boat launching ramps and campgrounds.

The Stepps fought for their land in court, but ultimately lost.