A dam was built on the Afon (river) Cefni in the 1940’s, creating the reservoir to supply drinking water to the island. A currently disused railway called Lein Amlwch cuts the lake in two. This railway used to run from Amlwch Port to the village of Gaerwen where it joined the main line.

The Cefni Angling Association, established in 1952, manages the reservoir as a fishery, with part of the north eastern half being managed as a nature reserve. Two main rivers feed into Llyn Cefni, the Afon Frogwy on the west side and the Afon Erddreiniog entering on the north east side. This river links the lake to the Cors Erddreiniog National Nature Reserve, which is an important fenland area.

The lake is easily accessible using the Lôn Las Cefni cycleway which meanders along the Afon Cefni from the Dingle in Llangefni and splits at the dam where the river now originates. Alternatively, there are car parks located at the south western and north eastern tips of the lake.