On its north shore is located the historic and eponymous town of Grand Lake.

Natural tributaries to the lake are the North Inlet and East Inlet, both of which flow out of Rocky Mountain National Park, which surrounds the lake on three sides.

Grand Lake is located 1 mile from the Park's western entrance.

When the Colorado-Big Thompson (C-BT) project is diverting water to northeastern Colorado, water collected in Lake Granby can be pumped back into Shadow Mountain where it flows backward into Grand Lake, then under Rocky Mountain National Park and the Continental Divide via the Alva B. Adams Tunnel to the Big Thompson River on the eastern slope of the Rocky Mountains.

From there, the water flows into the South Platte River and is used for agriculture, municipal, and industrial purposes.