With the surrounding area it forms the protected Nature Park Palić, which covers 7.25 square kilometres (2.80 sq mi).

Despite popular belief, Lake Palić is not a remnant of the vast Pannonian Sea which covered this area and completely drained out some 600,000 years ago.

It is estimated that both the Palić and Ludoš lakes originated in the early Holocene, around 10,000 years ago, when the last major changes in the surrounding terrain occurred.

Prior to that, since the draining of the sea, the European climate was much colder, with the exchange of the cold and dry and the warm and wet periods.

[1] The popular local legend of the lake's origin, which also explains the name, says that the shepherd Paul (Pal in Hungarian, Pavle in Serbian) was pasturing his sheep in the area.

[3] Also built were the Summer Stage, designed by Baltazar Dulić, Music Pavilion (in 1910), Abacija cinema (in 1925), and Little Inn.

The present appears of both town and the lake spa were designed in the 1910s by the architects Marcell Komor [hu] and Dezső Jakab in Hungarian Secession style.

[4] After World War II, a settlement made of weekend-houses developed on the eastern shore, south of Muški Štrand.

The games included fencing, running, stone throwing, wrestling and bicycle riding around the lake, which became a traditional event.

The games were organized by Lajoš Vermeš, a school friend and a roommate of Pierre de Coubertin, the founder of modern Olympism.

[8] Named the "Palić Olympics", the games became international in 1884 when first athletes from Serbia participated, as the lake was part of Austria Hungary at the time.

[13] Starting in 1891,[3] Vermeš invested into the construction of various sports structures and lodging venues, including the elliptic track, 225 m (738 ft) long, with the bleachers, so it was called the Enclosed Arena.

[13] One of the structures built by Vermeš to accommodate the participants was Villa Bagovljar, today colloquially called Sovina Kula ("owl tower").

The newly formed green belt along the lake was added, while the protection was stripped of the lots in the urbanized touristic zone, where numerous new structures were planned.

Some of the experimental works on a small section of the lake which is not opened for tourists showed some success, but as of 2017 everything is still just at the planning stage.

[5] Expropriation of the surrounding land is expected to be finished by the end of 2017 which would allow the formation of the buffer zone and the sewage in the town of Palić was to be done by 2018.

Still, the pinky foam formed on the lake several times in the 2017-18 period and the results showed that the quality of the water deteriorated.

Experts involved in the process of preservation don't have a definite answer why: a long period of previous pollution, weather conditions, draught, several malfunctions of the filter (January–March and August–September 2017), etc.

Though still categorized as the lowest, fifth category and not suitable for swimming, the water had less ammoniacal and nitrite compounds, and less algae while zooplankton Daphnia, which feeds on phytoplankton, reappeared in the lake.

Apart from the direct damage in reducing number of animals (including the protected European pond turtle), it also affects the natural purification of water.

The buffer zone consists of four layers: 1) reed bed, in the water itself, which prevents the erosion of the banks by the waves and forms habitat for the birds; 2) bank slopes, inhabited by the herbaceous plants and habitat for the reptiles; 3) grassy areas, used only by those who administer and watch the protected areas; 4) pedestrian and bicycle path, with benches and stops where possible.

In order to create the buffer zone, a monoculture of wild blackberry shrubs which spread all over the lake, had to be eradicated.

[22] Fishing out of Prussian carp showed that small populations of indigenous species survived in the lake, some specimen weighing up to 10 kilograms (22 lb).

Since then, 682 houses were connected to the Subotica's sewage system, while the wastewater from the canal is conducted into the water treatment facility.

[24] In April 2023 it was made public that the farm of the Subotica District Prison was illegally dumping animal waste in the lake.

It was overpopulated with pigs and sheep, so the warden Dušan Suvajac ordered digging of the canal, 50 cm (20 in) deep and 15 m (49 ft) long, to conduct the overflow of waste into the lake, instead into the septic tanks.

Local authorities refused to comment, but on the very day the case was sent to Subotica the canal was hastily filled and hidden under the bales of hay.

The entire complex will cover an area of 44,000 m2 (470,000 sq ft) with 10 swimming pools, water slides and other aqua park attractions.

[2] Main points of interest, mostly along the northern shore where the town of Palić reaches the lake, include the 19th century Hotel Park, surrounding park made of plane trees planted in the 1910s, former pulmonary sanatorium, luxurious Hotel Jezero, fairy-styled villa Lujza, red-orange castle and the restaurant “Riblja Čarda”, the location of the Vermeš' "Olympic games”.

Local authorities addressed the state government to intervene with the contractors, at the same time announcing construction of the new, luxurious hotel in the same area as the other projects.