The lake is bounded by the Madden Dam and linked to the Panama Canal.

The Chagres, Pequení, Boquerón, Salamanca, La Puente, Indio, Piedras, San Cristóbal and Escandaloso rivers flow into the lake.

The rivers of Lake Alajuela contribute 45 percent of the total water for the canal.

[2] In early December 2010, Lake Alajuela reached its highest recorded water level, prompting authorities to close the Panama Canal for 17 hours.

In late August 2023, the lake was reported to be at its lowest levels in recent years, limiting Panama Canal traffic.