In 1885, Thomas Jefferson Adair moved into the area with the intention of farming. The locals joked that only a fool would try and farm the place. The name stuck! The tiny town of Adair has long since been covered by the lake, but it was Adair who was responsible for the name Fool Hollow.

The park along the lake, located in the Apache-Sitgreaves National Forest, opened in 1994 as a result of cooperation between the U.S. Forest Service, Arizona State Parks, Arizona Game and Fish and the city of Show Low in partnership with Arizona Public Service and McCarty Construction Company. Today, visitors can camp among the tall pines and hike along the lake at a cool 6,300 feet in elevation. Year-round camping, fishing, picnicking, boating and wildlife viewing opportunities make Fool Hollow Lake Recreation Area a popular place.