The potential of the Ōi River valley for hydroelectric power development was realized by the Meiji government at the start of the twentieth century.

Its mountainous upper reaches and tributaries were areas of steep valleys and abundant rainfall, and were sparsely populated.

In September 1954, a typhoon caused flooding in the downstream reaches of the Ōi River, leading to plans being drawn by the central government in Tokyo for a new dam, which was justified as a "multipurpose" dam to provide industrial water, agricultural water in addition to flood control.

The Nagashima Dam Reservoir is a popular attraction for canoeing, fishing and camping, and for its proximity to hot spring resorts and the steam locomotives operated by the Ōigawa Railway.

The area is popular with mountain climbers heading towards the high peaks of the Minami Alps National Park.