Its reservoir supplies drinking water to Chemnitz and, in conjunction with the Central Ore Mountain Dam System (Talsperrensystem Mittleres Erzgebirge) and its other dams - Neunzehnhain I und II and Einsiedel - contributes to the supply of the region covered by the South Saxony Long Distance Water Association (Zweckverbandes Fernwasser Südsachsen).

To a lesser extent the dam is also used to generate electricity and for flood protection.

The dam was built from 1929 to 1933 in the vicinity of Lengefeld in the Ore Mountains and was taken into service in 1933.

The streams impounded are the Haselbach, Saidenbach, Lippersdorfer Bach and Hölzelbergbach.

The Saidenbach Dam also has a pre-dam (Forchheim) and ten upper basins, of which four are usually filled.