The impoundment of Codorus Creek was the result of a cooperative project between the Commonwealth of Pennsylvania and the P. H. Glatfelter Paper Company of Spring Grove, Pennsylvania. This undertaking was the first of its kind in the Commonwealth and was designed to serve the water supply needs of a private industry and the town of Spring Grove, and to provide a public recreation area.

The P. H. Glatfelter Company paid approximately $5.5 million to construct an earth fill dam, 109 feet high, 1,690 feet long and 750 feet thick. The dam itself is on Glatfelter property and is not owned by the park. The gates at the dam were closed to impound water in December 1966. The Commonwealth acquired the park land under the "Project 70" land acquisition program during 1965-1966. Originally the park was known as Codorus Creek State Park. Lake Marburg is named for the small community of Marburg that is covered by the lake.

The design and construction of the park facilities were funded by the "Project 500" bond program and the federal government's Land and Water Conservation Fund.

The main launching area, located off of Sinsheim Road, was the first project in Pennsylvania completed for public use under the "Project 500" Program. This lighted facility, open 24 hours a day, year round, was dedicated for use on May 9, 1970.