It is named for the large local lake, which for years has been a popular resort area. The lake is surrounded by numerous homes. Most are year round residences, although some summer cottages dot the shore. It is especially noted for two islands in its center, separated by a narrow, shallow strait (both of which have cabins).
The lake's name comes from the local Pequot Indian word for "lake with pierced islands". Some time long before the area was settled by whites, the tribe living there felt they were being cursed by their irritable Great Spirit. To try and appease him, the main chief agreed to sacrifice his daughter, who willingly threw herself into the lake and drowned. The tribe's shamans announced that never again would an Indian be killed on the lake. Lake Pocotopaug is the largest inland body of water in Connecticut with . The Indians were also known to have hunted on Spellman's point, a quaint street lined with cottages, using loud noises to scare the animals to the end of the peninsula, and thereby an effective way to gather food, however in the mid-to-late 1800's it was sold for a sack of bean to the "Bay point" society.
Sears Park is located at the lake and has various swimming, boating and recreational facilities for residents.
In recent years the lake has become a place of ecological study due to the large scale algae blooms that resulted in 2000. Tests have shown that longstanding shoreline development and fertilizer use are causing increasing issues. A town sanctioned Lake Commission and the Friends of Lake Pocotopaug are two organizations concentrating on improvement ideas.