Stagecoach Reservoir stands as the largest water storage facility along the Yampa River, which is a significant tributary of the Green River, originating in the Flat Tops Wilderness/Routt National Forest about 50 miles southwest of the park. The fertile upper Yampa Valley attracted early ranchers, farmers and coal miners. Many of the reservoir’s campgrounds and picnic areas are named after early coal mines and mining camps. Before the construction of Stagecoach Reservoir in the early 1970s, the Woodmore Corporation had plans to transform the area into a luxury resort with residential lots, neighborhoods, skiing, a golf course, trails and a marina. However, the corporation went bankrupt in 1974, leading to ongoing challenges for the development.

The dam and reservoir were completed by the Upper Yampa Water Conservancy District (UYWCD) in 1989, the same year the park began operation. Operated under a lease agreement between UYWCD and Colorado Parks and Wildlife, the original lease, signed in 1987, granted Colorado Parks and Wildlife exclusive control and responsibility for the Reservoir Property for public recreational purposes. A 20-year lease agreement signed on August 25, 2004, extends the partnership through May 1, 2024.

In the summer of 2010, UYWCD increased the height of the dam spillway crest by four feet, raising the maximum pool elevation of Stagecoach Reservoir from 7,200 feet mean sea level (msl) to 7,204 feet msl. The reservoir has since served as a vital resource, offering recreational opportunities to the general public under the management of Colorado Parks and Wildlife.