Before European settlement in North America, the Native American nation of the Cherokee lived in the area and had a settlement called Keowee town along what they called the Keowee River. It was capital of the Eastern or Lower Cherokees. In 1753, white settlers built Fort Prince George across the river from Keowee Town. The Cherokee were historical allies of the British Crown, and were left on their own and defeated after the British loss at Sullivan’s Island in 1776. After being decimated by a large force of the Continental Army and South Carolina militia under the command of Colonel Andrew Williamson, the Cherokee from the Carolina highlands and Georgia petitioned for peace. The Treaty of Dewitt’s Corner, signed May 20, 1777, stipulated the new border to be the crest of the Oconee Mountains, and the Cherokee ceded almost all the land in modern Oconee, Pickens, Anderson, and Greenville counties of South Carolina. The Hopewell Treaty of 1785 and others reaffirmed those boundaries, while clarifying access for the bordering Cherokee to continue to use the hunting grounds along the mountainous slopes of the border that technically fell into the land of the white settlers. In the treaty of Washington of 1816, the Cherokee sold this remaining strip of land and its hunting grounds to the United States for $5,000 and relocated to points west in Georgia. The land that eventually became the extreme northern border of modern Lake Keowee was never again contested. Indian Removal Act of 1830 forced the Cherokee to depart the region, and one estimate was that up to 4,000 of 16,000 Cherokee died from disease, exposure and starvation on what became known as the Trail of Tears.
Beginning around 1963 and continuing in subsequent years, a company called the South Carolina Land & Timber firm began purchasing land along the Keowee river for the specific purpose of “acquiring, holding, and developing land and timber properties”. One source suggested that the then-called Duke Power Company bought 83,400 acres from the Singer Corporation as well as private landowners. In the mid-1960s, Duke executives consulted with state and federal authorities, and searched for a way to supply the growing southeastern region with greater electricity. They explored various ways to purchase inexpensive land, create artificial lakes, and use the power from stored energy to both cool the reactors from nuclear power plants as well as generate power from cascading waters by hydroelectric methods. The project was modeled in part on successes stemming from the Tennessee Valley Authority. On January 2, 1965, Duke Energy president W. B. McGuire held a press conference at Clemson University and announced plans to build a large complex to generate power, called the Keowee-Toxaway project, which would cost an estimated $700 million. Two days later, Duke filed for license to build the first phase of construction.
Since the project would require the flooding of a large area, Duke Energy worked with archaeologists from the University of South Carolina to excavate many of the sites in the area, including the fort and nearby areas. One participant in the dig built a model of an excavation site that can be viewed at the Keowee-Toxaway State Park. The Cherokee site of Keowee Town was another excavation site, and thousands of artifacts were discovered including pottery beads as well as remains from humans and animals.
A massive demolition and building project began. It involved clearing huge swaths of forest land by removing and selling lumber from the downed trees. Selected wooded areas were set afire to enable bulldozing operations. Some areas were dug deeper to increase the future depth of the lake and give it sufficient volume for its cooling purposes. Duke hired the Jeff Hunt Machinery Company to clear the basins for the Lake Keowee and Lake Jocassee sites; at the time, it was one of the largest orders for land clearing ever to have been given in the states of North Carolina and South Carolina; later, it hired the firms of Blythe Brothers and Clement Brothers to begin earth-moving operations commencing in 1967. In the first phase, dams were built on the Keowee and Little rivers to create Lake Keowee; in addition, a dam blocking the Jocassee river created Lake Jocassee. One estimate of the expense for this phase of the project was $83 million. At the official groundbreaking ceremony in April 1967, a red, white and blue dynamite charge was set off by then-South Carolina governor Robert McNair.
Three dams were built, of which the Lake Keowee dam was the longest at 3,500 feet (1,100 m) in length, 800 feet (240 m) wide at its base, and 20 feet (6.1 m) wide at the top. While it is 20 feet (6.1 m) higher than the Little River dam, it is 215 feet (66 m) lower than the Jocassee dam. Both lakes were fed by the Whitewater, Thompson and Toxaway Rivers. In addition, the Lake Jocassee hydro station feeds water into Lake Keowee. The initial transfer of water began in December 1973, and commercial operation began on December 19, 1973.