The dam is 11 miles (18 km) downstream from Lowell and is visible from Route 28 (Broadway) in Lawrence and from behind the Pacific Paper Mill (now defunct).

[6][8] In part due to the successful use of the river's power to develop the industrial potential of the city of Lowell, a consortium of local industrialists (Abbott Lawrence, Edmund Bartlett, Thomas Hopkinson of Lowell, John Nesmith, and Daniel Saunders) set out to create a "New City on the Merrimack", which would later become known as Lawrence.

[6] Initially known as "The Merrimack Water Power Association" (1843) under Samuel Lawrence and Daniel Saunders, the association had identified that "there lay a tract of land resting upon foundations of imperishable blue stone and so shaped and environed by nature as to be a rare site for a permanent dam and a connected system of canals, and for the building of a manufacturing city"; this tract was at Bodwell's Falls.

[10][11] In 1845, Abbott Lawrence, Nathan Appleton, Patrick T. Jackson, John A. Lowell, Ignatius Sargent, William Sturgis and Charles S. Storrow incorporated as the Essex Company with a charter to develop water power for planned textile mills along the Merrimack River by building a dam at the preferred site.

[9][14] The plans set forth by the Essex Company, for the dam and surrounding industrialization, were so popular that it took less than one month to acquire capital of 1 million dollars.

The construction commenced and finished on the same day (September 19) three years apart (one source states it was the same hour) from the first stone laid in 1845 to the last in 1848.

At the time of its construction it was the largest dam in the world,[18] and it remains one of the significant landmarks defining the city to which its creation gave birth.

[17] The construction of the dams and canals might have been more expensive if not for the easy availability of cheap labor, often Irish immigrants, who worked in what could be appalling and unsafe conditions which contributed to injury and sometimes death.

[21] Increasingly from the end of World War II, the economic, social and industrial landscapes within which the mills relied on the dam's power were changing.

Added to the National Register of Historic Places in 1977, the Great Stone Dam is considered one of the greatest engineering projects of the 19th century due to its size, its method and the impact of its development.