The lake is formed by the Santiago Dam at its north end, which was built between 1929 and 1931, and the lake was originally called the Santiago Reservoir. The dam was built by the Irvine Company (the private developers of the city of Irvine) and the Serrano Irrigation District (now called the Serrano Water District); it is now administered jointly by the Serrano Water District and the Irvine Ranch Water District. The lake provides drinking water to Villa Park and some parts of Orange, and provides supplementary irrigation water to neighbouring ranches.
Stocked with largemouth bass, catfish, and panfish, the lake fishery opened to the public in 1941. The land around the lake is owned by the Irvine Range Land Reserve, which leases the fishing, boating, and camping concessions to a private company.