It is an earth-fill embankment dam with a reservoir (known as Kaptai Lake) with water storage capacity of 6,477 million cubic metres (5,251,000 acre⋅ft).

In 1946, E. A. Moore recommended the proposed project at Barkal about 65 kilometers upstream of the present dam site at Kaptai.

In 1950, the Marz Rendal Vatten Consulting Engineers suggested a site at Chilardak, about 45 kilometers upstream of Kaptai.

By this time the dam, spillway, penstock, and two 40 MW Kaplan turbine generators were built in the power station.

The project was financed by the East Pakistan Government (at the time), the United States, and the Overseas Economic Cooperation Fund.

Inhabitants of the storage reservoir area who lost their homes and farmland due to flooding were not compensated.