Part of the New York City water supply system, it was formed by the construction of Downsville Dam, and impounds over one-quarter of the East Branch's flow.

The reservoir is over 160 feet (49 m) deep at its maximum point and contains 430,256 acre-feet (530,713,000 m3) of water at full capacity.

From there the aqueduct continues on to Hillview Reservoir, from which it is distributed by tunnel to users in the City.

Peapackton is a Lenape Native American term meaning "marriage of the waters".

The reservoir lies on land New York City purchased in the valley in 1942, and led to the displacement of 974 people, destruction of four hamlets (Arena, Pepacton, Shavertown and Union Grove), and submersion of nearly one-quarter of the Delaware and Northern Railroad in the process.