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Lake Arrowhead is a man-made reservoir with a surface area of approximately 780 acres and a capacity of 48,000 acre feet. The lake was originally intended to serve as part of a major waterworks project to provide irrigation water to the San Bernardino Valley, and construction of the Lake Arrowhead Dam began towards that end in 1904. However, the original project was halted due to litigation over water supplies to land owners on the desert side of the mountains. Construction of the dam was completed in 1922 by the Arrowhead Lake Company, a Los Angeles syndicate, as part of a plan to develop the area into a resort.

The business district of Lake Arrowhead was burned to the ground in the late 1970's and was rebuilt to current status. The pavilion, which stands in the center of the village, was the only original building preserved. Many, many movies have been filmed in lake Arrowhead, including "Heidi", "Magnificent Obsession", "The American President," "Space Jam," and "The Parent Trap."