A hydroelectric power plant on the Osage River was first pursued by Kansas City developer Ralph Street in 1912. He put together the initial funding and began building roads, railroads, and infrastructure necessary to begin construction of a dam, with a plan to impound a much smaller lake. In the mid-1920s, Street's funding dried up, and he abandoned the effort.
The lake was created by the construction of the 2,543-foot (775 m) long Bagnell Dam by the Union Electric Company of St. Louis, Missouri. The principal engineering firm was Stone and Webster. Construction began August 8, 1929, was completed in April 1931 and reached spillway elevation on May 20, 1931. During construction, the lake was referred to as Osage Reservoir or Lake Osage. The Missouri General Assembly officially named it Lake Benton after Senator Thomas Hart Benton. None of the names stuck, as it was popularly referred to by its location at the northern edge of the Ozarks. The electric generating station, however, is still referred to by the utility company as the "Osage Hydroelectric Plant." While some sources indicate that more than 20 towns, villages and settlements were permanently flooded to create the lake, subsequent research indicates that the actual number was closer to eight, while several other sites had been previously abandoned, were relocated to make way for the lake, or were on high enough ground that the creation of the lake did not affect them.
During the process of land acquisition for the lake during the 1920s, 17,500 acres (71 km ) of land were set aside for a national park along the Grand Glaize Arm of the lake. In 1946, this land was acquired by the State of Missouri for Lake of the Ozarks State Park, the largest State Park in Missouri. Another state park on the shores of the lake is Ha Ha Tonka State Park on the Niangua Arm of the lake.
In 2011, the Federal Energy Regulatory Commission (FERC) renewed the lease for the power plant operated by Ameren Missouri. In the process, FERC determined that numerous homes and structures were encroaching on utility land in violation of federal regulations. According to the Boston Globe, this issue "has triggered panic in the area's lakefront communities and led to a growing battle among regulators, a utility company, land attorneys, and the state's congressional delegation."
In November 2018 the Lake Ozark Fire District acquired a $500,000 fireboat.
During the 2020 COVID-19 pandemic the Lake of the Ozarks gained notoriety when on Memorial Day (May 25, 2020) a large crowd congregated at the lake.