Preliminary construction began in early-2012, but work on the dam itself was suspended shortly thereafter due to complaints from Cambodia and Vietnam downstream.

The formal project development agreement followed in November 2008, and a feasibility study was conducted that same year by Swiss-based AF Colenco and Thai TEAM consultants.

Karnchang the go-ahead to resume work on the Xayaburi Dam, informing the company that the Mekong River Commission's decision-making process was completed.

After this, Pöyry was contracted to modify the design and to supervise the dam's construction, without awaiting the results of the unspecified "additional environmental studies".

[26] The French engineering company Compagnie Nationale du Rhône(CNR) was hired to provide an independent "peer review" of the Pöyry findings related to hydrology, navigation, and, in particular, sediment transport.

[26] According to International Rivers, the dam's construction would cause around 2,100 people to be resettled, and more than 202,000 people living in the dam's area would experience impacts due to the loss of agricultural land and riverbank gardens, bring an end to gold panning in the river, and provide less access to the forest resources of the Luang Prabang Range.

[9][11] According to a World Wildlife Fund (WWF) report, the Xayaburi Dam would drive the already critically endangered Mekong giant catfish (Pangasianodon gigas) to extinction.

[28] Because the Mekong is a complex ecosystem that hosts the most productive inland fisheries in the world, the stakes are high for the construction of such a dam.

According to a study conducted by WWF and the UN Food and Agriculture Organization, and coordinated by the WorldFish Center, there are 229 fish species whose spawning and migratory patterns would be affected by a mainstream dam.

This change in fish biodiversity and abundance would greatly affect the tens of millions of people in the Greater Mekong Sub-region who depend on the river for their food and livelihood.

[29] The MRC warns that if Xayaburi and subsequent schemes went ahead, it would "fundamentally undermine the abundance, productivity and diversity of the Mekong fish resources".

"It is unreasonable to assume that the proposed fish passage options will be efficient when they are neither based on successful experience in a similar context nor on a study of the local species."

An MRC report claims that dam projects on the Mekong River will reduce aquatic life by 40% by 2020, and predicted that 80% of fish will be depleted by 2040.

[3][31][33] Record low water levels in the Mekong in July 2019, normally the rainy season, have led critics to point to the Xayaburi Dam as a contributor to the problem.

Xayaburi Power counters that the facility is a run-of-river dam, so outflow from the 514 million cubic metre reservoir equals inflow.