The dam serves at once four distinct purposes: it generates hydroelectricity; it regulates and limits flooding; it releases stored water to permit year-round navigation on the Cumberland River; and it creates Lake Cumberland for recreation, the largest man-made lake by volume east of the Mississippi river.

[6] In 1968, signs of seepage problems within Wolf Creek Dam's earthen embankments and foundation were discovered.

Karst formations are large void spaces lying beneath seemingly solid species of limestone bedrock.

Karst formations are created when limestone bedrocks are, over time, attacked by water through natural precipitation seepage.

In this form of construction the majority of the dam's structure (measured by length across the streambed) is a nominally waterproof earth fill embankment body, with only the powerhouse and (if so equipped) the controlled overflow spillway section located within a concrete monolith.

In the particular case of Wolf Creek dam, the earth embankment section is placed directly upon the formerly existing streambed and bottomland, with only the surface soils and clays removed.

A concrete diaphragm wall was chosen as the appropriate cut-off solution and extended through the earth embankment into the rock foundation.

Reports of seepage has caused public worry and if Wolf Creek Dam fails, the USACE estimates US$3 billion in property damage.

[7][9] Since March 2005, around the time when increased seepage rates were discovered, Lake Cumberland has been held at nearly constant water levels to reduce the stresses placed on the structure and its foundation.

[9] In April 2009, construction began on a new concrete barrier wall within the embankment of the Wolf Creek Dam.

[7] In 2010, the Commonwealth of Kentucky proposed a new route for US 127 that would cross the Cumberland River in the first bend downstream, potentially removing traffic from atop the dam.