In 1919, French civil engineer Labbe had a small lake dug in a small valley where there is a spring and a dam built from Thuy Ta to former Huong Dao (Scout) House, a meeting place of the local scouts before 1975. In 1923, the lake was expanded with a second dam below and was named strong hurricane broke both dams. In 1935, a large stone dam was buirt to replace the two old ones, creating Xuan Huong Lake. The lake's perimeter is 5.5 kilometers and the average depth is 1.5 meters. Peach and willow trees line the bank of the lake. The bridge further down, on Nguyen Thi Minh Khai Street, leading to the town center, is called Dao. It was the name of the first provincial  chief of Da Lat, Mr Pham Khac Hoe.

For many years, the route around the lake has been the main part of the annual Ho Chi Minh City TV cycling race.

There are quite a few recreational options at the lake: pedal boat (VND 30,000/h), motor boat (VND 60,000-80,000/trip), pedal rubber dinghy (VND 30,000/h). In addition, there are kayaks and sailing boats.

On January 10, 1997, authorities of Lam Dong Province decided to use Xuan Huong Lake as the center for Da Lat tourism. The lake was also the first beauty spot in Lam Dong Province to be recognized as a national Beauty Spot and Historic Site by the central government in 1988.