The dam's main purpose is for the generation of hydro-power and is one of the sixteen major dams that comprise the Snowy Mountains Scheme, a vast hydroelectricity and irrigation complex constructed in south-east Australia between 1949 and 1974 and now run by Snowy Hydro.

The dam was constructed by a consortium comprising Kaiser-Walsh-Perini-Raymond based on engineering plans developed by the Snowy Mountains Hydroelectric Authority and the United States Bureau of Reclamation under contract from the Snowy Mountains Hydroelectric Authority.

At 100% capacity the dam wall holds back 2,677 megalitres (94.5×10^6 cu ft) of water.

Water from the reservoir, after passing over the spillway of the Tumut Pond Dam, flows downstream, above the underground Tumut 1 Power Station, and into the impounded waters of Talbingo Reservoir, formed by the Talbingo Dam; past Tumut 3 Power Station, into Jounama Pondage, formed by Jounama Dam; and then into Blowering Reservoir, formed by Blowering Dam, passing through Blowering Power Stations.

The natural flow of the Tumut River continues into the Riverina region.