The reservoir is part of the U.S. Bureau of Reclamation's Crooked River Project, flooding a juniper- and sagebrush-filled canyon, and was finished in 1961.

The dam and reservoir are owned by the Bureau of Reclamation, and operated under contract by Ochoco Irrigation District.

Water skiing, wakeboarding and tubing are some of the most common sports and about half of the boats on the lake are there for this purpose.

Non-avian wildlife in the area include bats, black bear, coyotes, red fox, gray fox, bobcat, lynx, mountain lion, mule deer, elk, black tailed deer, pronghorn, badger, striped skunk, spotted skunk, porcupine, rockchuck, rabbits, squirrels, chipmunks, raccoons, snakes, and other assorted small mammals, reptiles, and amphibians.

In 2021, Prineville Reservoir State Park was announced as an IDA Dark Sky Place, the first in Oregon.