The canyon in which Lake Billy Chinook lies was carved by the three rivers that flow into the lake. The Deschutes Formation into which it is carved began forming about 11 million years ago, as alternating layers of basaltic lava, stream sediment, and volcanic debris flowed into the area from the Cascade Range. One to three million years ago, lava flows from the Cascades and Newberry Volcano capped the exposed material, forming the "rimrock basalt" which is visible atop the canyon. Further erosion by the three rivers, volcanic activity, and wind have continued to form and erode the canyon.
Lake Billy Chinook offers fishing for brown trout,and and Kokanee, a land-locked salmon. The lake is also one of the fewbodies of water in the United States where bull trout, a threatened species that thrives in Lake Billy Chinook, can be legally fished. As of 2014, the Metolius arm of the lake is closed to fishing, without a tribal permit.
The majority of Lake Billy Chinook is surrounded by The Cove Palisades State Park. The state park offers both camping and lodging and is open all year for day use. The Cove Palisades consists of two campgrounds: Crooked River Campground and the Deschutes Campground which is open from mid-May to mid-September. The Crooked River Campground is located higher up in the canyon where as the Deschutes Campground is walking distance from the water.
The Island
Between the Deschutes and Crooked River branches of the lake, there is a large and isolated, peninsular plateau named the Island. The Island is surrounded on three sides by vertical cliffs at heights of to above the water. The Island was designated a Research Natural Area by the Bureau of Land Management in 1986. In 1997, the BLM closed the Island to the public, although educational institutions and conservation groups are permitted to visit between May and mid-February. Owing to the steep cliffs that surround it, the Island has never been grazed by livestock, except for one season of grazing by sheep in 1921. As a result, it contains one of the United States' last remaining undisturbed communities of two native vegetation types: western juniper-big sagebrush-bluebunch wheatgrass and western juniper-big sagebrush-bitterbrush. It also is an unusual home to the striped whiptail lizard, a species of southwestern U.S. deserts that settled the Island by escaping from a recreational vehicle. The Island has not faced a sizable fire in the last century. The lack of a major fire has supported the strong presence of woody vegetation on the Island. The BLM plans to let any fire naturally burn as part of their research, contingent on weather conditions and personnel that can prevent it from affecting the Cove Palisades State Park facilities below the Island. In 2011, U.S. Secretary of the InteriorKen Salazar designated the Island a National Natural Landmark. It is one of eleven National Natural Landmarks in Oregon.