As the state's fourth-largest natural lake, it has over 1,200 acres (490 ha) of surface water, and consists of three basins.

As European fur traders made wild game scarce, the Indians were persuaded to sell their land and move west.

[2] The lake occupies an area west of Interstate highway 69 in Indiana's Steuben County, which borders Michigan and Ohio.

A small islet can be found near what was Bledsoe's Beach on the west side of the Second Basin near Jimmerson Creek.

The Lake James area was the hunting grounds of the Potawatomi Indians, who managed the land and wildlife with periodic controlled burns.

One beach is located in front of the park's Potawatomi Inn, which faces the north side of the lake's First (or Lower) Basin.

[19] In 1875 Lake James was described as "remarkably clear and free from mineral matter" with water having a "pleasant taste" and "neutral to litmus paper".

A portion of Spring Point, located on the west side of the lake where the First and Second basins meet, was platted in 1895.

[27] Settlement accelerated when an electric railway connected the city of Angola with the southernmost shore of the lake's First Basin, known as Paltytown.

[3] During the same year, a 3-mile (4.8 km) line was built from the New York Central Railroad station in the nearby city of Angola to the southern tip of Lake James.

The line was lengthened by 0.75 miles (1.21 km) in 1904, connecting Angola's New York Central station with the heart of the business district.

[29] By 1914 Paltytown was described as "several cottages, a supply store, a photo gallery and dancing pavilion, and the Lake James Hotel.

[31] Better roads and the automobile made the railroad obsolete, but it played a key role in the lake's development.

[28] In 1928 another group agreed to purchase the Paltytown properties, and the former resort became the Lake James Christian Assembly.

The resort eventually included a dance hall, a cocktail lounge, a hotel, a pier and swimming area, a golf course, and a recreational vehicle park.

[35] A restaurant opened on the site in 2013 with lake views and dock space for customers arriving by boat.

Eventually, these large pieces of ice melted and filled the depressions in the land they originally occupied, creating numerous lakes and marshes.

Croxton Ditch is the largest, and flows into the First Basin from the south side at a rate of 61.74 cubic feet per minute (1.748 m3/min).

[52] Water from Jimmerson Lake continues westward over a dam at Nevada Mills, forming Crooked Creek.

Water temperature for Lake James ranged from 46.4 to 78.4 °F (8.0 to 25.8 °C) in early August, and averaged 62.2 °F (16.8 °C) for all of the samples taken that day.

[56] The concentration of dissolved oxygen in Lake James ranged from 0.0 to 8.8 milligrams per liter for various depths during early August, and averaged 4.6.

[55] Nutrients such as phosphorus and forms of nitrogen are essential for plants, yet excess amounts can result in lower dissolved oxygen.

[56] The EPA found the phosphorus concentration in Lake James ranged from 0.013 to 0.219 milligrams per liter, and averaged 0.040.

This removes a significant portion of nutrient loading in the lake and should have a positive impact on future water quality.

[63] Lake James supports a variety of plants and animals, as it has woodlands and wetlands adjacent to its waters.

A partial list of animals found locally includes Blanding's turtles, northern leopard frogs, massasauga rattle-snakes, and the star-nosed mole.

Common birds such as ducks, geese, gulls, and purple martins can be found when the lake is not frozen.

Other birds that can be observed, especially around Pokagon State Park, include brown creepers, veeries, several types of warblers, bluebirds, Carolina wrens, Baltimore orioles, and pileated woodpeckers.

[71] Most plants found in the lake are native species that are useful for providing food and habitat for fish and waterfowl.

[77] Residents and visitors can participate in weekly sailboat races sponsored by the Lake James Yacht Club.