The lake is situated adjacent to the Tuggeranong Town Centre, and is bounded by the suburbs of Bonython in the south-east and Kambah in the north-west.

Lake Tuggeranong was created by the construction of a dam in 1987 coinciding with urban development in the district.

The lake was built as a sediment trap for soil and debris, and to improve the quality of the water flowing into the Murrumbidgee River.

The water quality of the lake is monitored by health and environmental agencies, and is subject to health hazards such as toxic blue-green algal blooms or high faecal bacteria counts, given the urban and rural runoff of the lake source.

A bicycle path surrounds the lake, running for 6.7 kilometres (4.2 mi).