At above sea level it is the highest lake in England and the highest marl lake in Great Britain. The lake is one of only eight upland alkaline lakes in Europe having a pH between 8.0 and 8.6. The catchment area of the lake is and the main inflow is a stream at the lake's north-west corner. The lake is at its deepest, with an average depth of and the surface area is . It takes approximately 11 weeks for water to leave the lake after it has entered. The primary outflow is a small stream at the southern end of the lake. The outflow stream goes underground after approximately before emerging downstream of Malham Cove as a source of the River Aire.
The lake is home to six species of fish, white-clawed crayfish, Great Crested Grebes, Moorhens, Coots, Tufted Ducks and Teal. A number of waders such as Redshanks, Curlews, Lapwings and Oystercatchers breed in the surrounding area. Two rare benthic copepods, Bryocamptus rhaeticus and Motatia mrazeki, are found in the lake, along with 22 species of molluscs—nine of which are found at their highest altitude in Britain. The lake also contains a number of submerged aquatic plants, while the surrounding area is home to a diverse number of plants including wild cranberry, bearberry, crowberry, dark-leaved willow and Purple Moor Grass.
The lake is located in the Malham and Arncliffe Site of Special Scientific Interest which was established in 1955. In 1992, the lake and its wetlands were designated as a National Nature Reserve. The lake was listed as a Ramsar Convention site in 1993. It is also in the Craven Limestone Complex Special Area of Conservation.
Following the dissolution of the monasteries, the estates of Malham Moor then changed hands several times until they were eventually acquired by Thomas Lister—later to become the first Lord Ribblesdale—in the mid- to late-1700s. Lister then built a hunting lodge on the site of the old farm in the 1780s. The estate was then sold to businessman James Morrison in 1852. Following Morrison's death the estates were inherited by his son, Walter, in 1857. While visiting Walter Morrison in 1858, author Charles Kingsley was inspired to write the Victorian era novel The Water-Babies, A Fairy Tale for a Land Baby. Walter Morrison died in 1921 and the estate subsequently changed hands a number times before being broken up. The house and the lake were eventually bought by Walter Morrison's great-niece, Mrs Hutton-Croft, in 1928. In 1946 Mrs Hutton-Croft gifted the house to the National Trust, who in turn has leased the house to the Field Studies Council who run the property as the Malham Tarn Field Studies Centre.