The actual body of water know as Lake Isabella came into being when a dam was built on the Chippewa River in the mid 1960's and the water was impounded. The idea was to build a resort community around the body of water in western Isabella County. Lots were platted and the properties were put up for sale. The area of the lake and the surrounding development was under the jurisdiction of several local townships and the County. In addition, the Lake Isabella Property Owners Association was very active in the nurturing of the area. As the population increased differences in local government regulations led to the desire for incorporation as a village. As the community around the lake has grown, more people became involved and after a lot of hard work the area is now an incorporated village known as the Village of Lake Isabella. It became official in 1998 and is recognized as a Home Rule Community the first one to be recognized by the State of Michigan in more than 50 years.
The lake itself is about 1,100 acres and lies at the foot of Bundy Hill, the highest point in Isabella County. The Chippewa River flows in at the west end and the river course swung in a big curve which the lake now follows to the southeast and back to the northeast. The quality of the water is high and is closely watched. Waters are usually sparkling blue and on an early clear fall day the colors on the surrounding hills in combination with the color of the water present some spectacular vistas.
The community has a number of beautiful homes on the Lake and the variety of housing in the area will suit most people's wishes. A small shopping complex is developing at the east end near the air strip. One of the major attractions beside the lake is The Pines Championship Golf Course. Over 1,100 people reside within the Village limits.