Discharge is into the Lakawaxen River, which flows into the Delaware River. Water travels 3 + 1⁄ 2 miles (5.5 km) in a 13-foot-diameter (4.0-meter) steel pipe (originally wood) to power two turbines which combined can generate 44 megawatts of power.

The lake was officially opened to the public on July 31, 1926. The former town of Wilsonville, which had been named after James Wilson, now lies under the water near the dam. In all, 17 miles (27 km) of roads and utility poles were rerouted, and Purdytown cemetery had to be relocated.

Trees were cut but stumps were not removed. Some house foundations remained, and as the valley was flooded the water was so clear that one could see the foundations under the water. Land to be flooded was purchased by PP&L from about 100 owners at about $20 per acre ($50/ha) and most of the property was razed or moved. The project took 2,700 men from 1924 to 1926 to complete and seven months for the reservoir to fill after the dam was closed off. In order to create the lake, PPL Corporation constructed a dam on Wallenpaupack Creek at Wilsonville and a levee named the Tafton Dike. Upon his death it went to the Penn estate, which sold approximately 12,000 acres (4,900 hectares) in 1793 to James Wilson, one of the signers of the Declaration of Independence. The indigenous Lenape people named the area 'Wallenpaupack' which means 'The Stream of Swift and Slow Water.' William Penn later owned the land and then deeded it to his son Thomas Penn. It is located near the Borough of Hawley, and forms part of the boundary between Pike and Wayne counties. It was created in 1926 by the PPL Corporation for hydroelectric purposes as well as flood control however, it is best known as one of several major recreational destinations in the Pocono Mountains. It comprises 52 miles (84 kilometers) of shoreline, with a length of 13 miles (21 kilometers) and a maximum depth of 60 feet (18 meters), and has a surface area in excess of 5,700 acres (2,300 hectares). After Raystown Lake, it is the second-largest lake contained entirely in Pennsylvania.

Lake Wallenpaupack is a reservoir in Northeastern Pennsylvania.

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