The lake was constructed in 1961 as an irrigation reservoir for dairying and for cereal crops. Water was diverted from the Richardson River during high-flow periods to create a reservoir holding an average of 1,130 ML and a maximum of 2,250 ML. The lake was used for waterskiing and other recreational and tourist activities based in the nearby towns of
Donald and St. Arnaud. However, in 2010, the Wimmera Mallee Pipeline was completed, meaning water storage at Batyo Catyo was no longer necessary. In 2012, Richardson River diversion rules were changed so water no longer flowed into Batyo Catyo, and the inflow from Rich Avon Weir was permanently closed. In 2020, local communities began campaigning to restore water to Lake Batyo Catyo for recreational purposes. == Fauna ==