Medina Dam was completed in 1913 in a privately financed project, creating the lake to supply irrigation water for local agricultural use.

The lake is fed by and discharges back into the Medina River, and serves both recreational and irrigation uses.

Due to drought conditions lasting up until July 2015, recreational fish species had disappeared.

[1][2] As part of the 2010–13 Southern United States drought, the lake water levels dropped below 5% capacity.

This is due to constant drought and irrigation as many experts claim it may take years of rain to replenish the reservoir.

In June 2024, Medina Lake had dropped down to 2.4% capacity, with Lakehills and the surrounding areas suffering an economic depression as a result along with depreciated home values and a rise in homelessness.