The reservoir was formed in 1960 by the construction of Longhorn Dam at its eastern boundary by the City of Austin. The western end of the lake is bounded by Tom Miller Dam, built in 1939. The lake was created for several reasons, including the need for a cooling pond for the Holly Street Power Plant, which operated from 1960 until 2007. The reservoir was also envisioned from the beginning as a recreational venue for the city.
By the 1970s, Town Lake and its shoreline had become neglected, polluted and overgrown with weeds. KTBC referred to the lake as an "eyesore." During his two terms in office (1971–75), the Mayor of Austin Roy Butler partnered with former United States First Lady Lady Bird Johnson to establish the Town Lake Beautification Committee with the purpose of transforming the Town Lake area into a usable recreation area. A system of hike and bike trails was built along the shoreline of the lake in the 1970s, establishing (what was then known as) Town Lake as a major recreational attraction for the city of Austin.
On July 26, 2007, the Austin City Council passed a controversial resolution authorizing the renaming of the reservoir from Town Lake to Lady Bird Lake in honor of Lady Bird Johnson, the former First Lady of the United States and a long-time resident of the Austin area who had died earlier that month. Johnson had declined the honor of having the lake renamed for her while she was alive. In renaming the lake, the City Council recognized Johnson's dedication to beautifying the lake and her efforts to create a recreational trail system around the lake's shoreline.
In 2009, non-profit organization Keep Austin Beautiful launched "Clean Lady Bird Lake". The program mobilizes thousands of community volunteers annually to conduct large-scale cleanups along the lake every other month and targeted cleanups throughout the year.
Lady Bird Lake is the easternmost lake of a chain of reservoirs on the Colorado River. This chain, known locally as the Texas Highland Lakes, also includes Lake Buchanan, Inks Lake, Lake LBJ, Lake Marble Falls, Lake Travis, and Lake Austin.
Lady Bird Lake is a major recreation area for the city of Austin. Its banks are bounded by the Ann and Roy Butler Hike-and-Bike Trail, and businesses offer recreational watercraft services along the lakefront portion of the trails. Austin's largest downtown park, Zilker Park, is adjacent to the lake, and Barton Springs, a major attraction for swimmers, flows into the lake. Much of the landscaped beauty of the parks surrounding Lady Bird Lake can be credited to the former First Lady, Lady Bird Johnson, who, in the 1970s, focused her attention on the Town Lake Beautification Project.
The Ann W. Richards Congress Avenue Bridge spans the Lady Bird Lake and is home to North America's largest urban colony of Mexican Free-tailed Bats, with a summer population of 1.5 million bats. At dusk, from March to September, Austinites and tourists line the bridge and lake shore to watch the dramatic sight of the bats streaming out in their nightly quest for insects. Eight other bridges span the lake, including two pedestrian-only bridges.
The City of Austin prohibits operation of most motorized watercraft on Lady Bird Lake. As a result, the lake serves as a popular recreational area for kayaks, canoes, dragon boats, and rowing shells. Austin's warm climate and the river's calm waters, nearly 6 miles (9.7 km) length and straight courses are especially popular with crew teams and clubs. Along with the University of Texas women's rowing team and coeducational club rowing team, who practice on Lady Bird Lake year-round, teams from northern universities (including the University of Chicago, the University of Oklahoma, and the University of Nebraska) train on Lady Bird Lake during Christmas holidays and spring breaks. Other water sports along the shores of the lake include swimming in Deep Eddy Pool, the oldest swimming pool in Texas, and Barton Springs Pool, a natural pool on Barton Creek which flows into Lady Bird Lake. Below Tom Miller Dam is Red Bud Isle, a small island formed by the 1900 collapse of the McDonald Dam that serves as a recreation area with a dog park and access to the lake for canoeing and fishing.
Music venues on the banks of Lady Bird Lake are home to a number of events year-round, including the Austin City Limits Music Festival in the fall, the Austin Reggae Festival and Spamarama in the spring, and many open-air concerts at Auditorium Shores on the south bank and Fiesta Gardens on the north bank. The Austin Aqua Festival was held on the shores of Lady Bird Lake from 1962 until 1998. The late Austin resident and blues guitar legend, Stevie Ray Vaughan played a number of concerts at Auditorium Shores and is honored with a memorial statue on the banks.
The Ann and Roy Butler Hike-and-Bike Trail, formerly the Town Lake Hike and Bike Trail, creates a complete circuit around Lady Bird Lake. It is one of the oldest urban Texas hike and bike paths. The trail is the longest trail designed for non-motorized traffic maintained by the City of Austin Parks and Recreation Department. A local nonprofit, The Trail Foundation, is the Trail's private steward and has made Trail-wide improvements by adding user amenities and infrastructure including trailheads and lakefront gathering areas, jewel box locally-designed restrooms, exercise equipment, as well as doing Trailwide ecological restoration work on an ongoing basis. The Butler Trail loop was completed in 2014 with the public-private partnership 1-mile Boardwalk project which was spearheaded by The Trail Foundation.
The trail is 10.1 miles (16.3 km) long and mostly flat, with 97.5% of it at less than an 8% grade. The trail's surface is smooth and is mostly crushed granite except for a few lengths of concrete and a boardwalk on the South-side of the lake. A pedestrian bridge incorporated into the trail bridges Barton Creek. The Roberta Crenshaw Pedestrian Walkway spans Lady Bird Lake beneath MoPac Boulevard and provides the trail's westernmost crossing of Lady Bird Lake.
Before 1971, the shoreline of what was then called Town Lake was mostly a mixture of weeds, unkempt bushes, and trash. Some concerned Austinites tried to clean up the lake, but the effort was only partly successful. In 1971, the City of Austin created the Town Lake Beautification Project and appointed Lady Bird Johnson as the project's honorary chairman. Johnson's involvement brought attention and money (including $19,000 of her own) to the Town Lake project, allowing for the planting of hundreds of shrubs and trees and the completion of the Hike and Bike Trail from the piecemeal construction that had been done up to that time.
The first water treatment facility in the City of Austin, the Thomas C. Green Water Treatment Plant, was built in 1925 to treat water from the Colorado River. The plant occupied 6 acres (2.4 ha) just west of the principal downtown business district. The water treatment facility was decommissioned in late 2008.
Lady Bird Lake has been stocked with several species of fish intended to improve the utility of the reservoir for recreational fishing. Fish present in Lady Bird Lake include largemouth bass, catfish, carp, and sunfish. A ban on the consumption of fish caught in the lake was issued by the City of Austin in 1990, as a result of excessively high levels of chlordane found in the fish. Although the use of chlordane as a pesticide was banned in the United States in 1988, the chemical sticks strongly to soil particles and can continue to pollute groundwater for years after its application. The ban on the consumption of fish caught in the lake was finally lifted in 1999.