The reservoir was formed in 1950 by the construction of Granite Shoals Dam by the Lower Colorado River Authority (LCRA).

The towns of Granite Shoals, Kingsland, Horseshoe Bay, Highland Haven, and Sunrise Beach are located on the lake.

The LCRA lowers the lake periodically for maintenance on Wirtz Dam and to allow landowners to remove sediment around their docks.

The Nightengale Archaeological Center at Kingsland is a unique educational park operated by the Lower Colorado River Authority that is adjacent to Lake LBJ.

Swimming in summer months is inadvisable due to the presence of the rare but deadly Naegleria fowleri.