Newspaper accounts in the early 1930's indicate Dunn County citizens envisioned creating a lake to enrich their lives. Circumstances became reality in 1936 when a dam was constructed near the confluence of Spring and Murphy Creeks. The Federal government built the dam as a Works Progress Administration (WPA) water conservation project during the dry Depression years. Several hundred local citizens were hired during dam construction in 1936 and 1937. The new dam created the first major lake in this part of the State. Farmers, ranchers, towns people, and wildlife all benefited from impounded water on the semiarid prairie.
In 1939, Franklin D. Roosevelt signed the Executive Order establishing Lake Ilo NWR as a breeding ground for migratory birds and other wildlife. Other Refuge purposes include fish and wildlife oriented recreation, environmental education, interpretation, conservation of endangered species, and protection of cultural and natural resources. Over the years, wetlands, shelterbelts, and grassland habitats were developed creating an oasis for both migratory birds and resident wildlife.
By the late 1980's, the 50-year-old dam was showing its age. A routine inspection by dam engineers found it to be unsafe, as well as not meeting current government standards.
To begin repair work, the concrete spillway was notched and the lake lowered 7 feet in 1989. The dam was raised and sloped, a new spillway and emergency spillway were installed, and a new low-level outlet structure was added. Work was completed in 1996.
Wildlife habitat was improved by the creation of two wetlands. Two islands were built of earth from the old dam. An informational display about the dam is found near the spillway and entrance road junction.