Balsam Lake is very well know for its great fishing for panfish (bluegill, sunfish, crappie, yellow perch, and bullhead) and sport fish such as largemouth bass, walleye, and northern pike. Other recreational activities such as boating, canoeing, swimming and water-skiing in summer and ice fishing, snowmobiling, and cross-country skiing and the 17.8 mi (29 km) Cattail State Trail.
Over fifty businesses line the shore of the lake, including resorts, motels, bait and tackle shops, grocery stores, restaurants, insurance offices, chiropractic, hardware, gas stations, taverns and more
The original plat records the Ojibwe Indian name of this place as Innenehinduc. Translated as "Place of the Evergreen", the town and village of Balsam Lake were named after this large lake.
Balsam Branch, the main outlet of Balsam Lake is a Class II trout stream.