Lake Arenal: The Sunken Town, the Scenic Route, and the Story Behind Costa Rica's Largest Lake

Most people who visit La Fortuna see Lake Arenal from a distance. They spot it from the highway, maybe stop for a photo on the way to the volcano, and move on to the next activity. What almost nobody realizes is that this lake holds more stories than any other body of water in Costa Rica. There is a town at the bottom of it. There is a road around it that most tourists never drive. There is a dam that quietly powers more than a tenth of the country. And there is a reason professional kitesurfers from around the world book flights to a small town called Tilarán every December. Lake Arenal is not just scenery — it is one of the most layered, unexpected, and underexplored places in Costa Rica. Once you understand what you are actually looking at, you will never see it the same way again.

A Lake That Did Not Exist 50 Years Ago

If you could travel back to 1968, Lake Arenal would not appear on any map. There was a small natural lagoon in roughly the same area, no larger than a few square kilometers, but the massive 85-square-kilometer lake you see today is entirely man-made. It was created in 1979, when Costa Rica completed the Arenal Dam at the narrow eastern end of the valley. The project flooded a long agricultural basin that stretched from what is today Nuevo Arenal all the way east toward the foot of the volcano, drowning pastures, farms, forests — and two entire towns.

The scale of the transformation is hard to overstate. Before the dam, this was dairy country. Families had ranched here for generations. After the dam, it was the largest lake in the country — over 30 kilometers long, with roughly 100 kilometers of shoreline. The entire geography of northern Guanacaste and southern Alajuela changed in the span of a single construction project.

Under the Water: The Sunken Town of Arenal

This is the part of the story that most travelers never hear. When the dam was finished, two towns had to be evacuated: Arenal (often called Arenal Viejo, or Old Arenal) and Tronadora. These were real communities with churches, schools, cemeteries, sodas, and stores. Families had lived in them for over a century.

The government of Costa Rica relocated the residents in the years leading up to 1979. People from Old Arenal were moved west to a newly built town called Nuevo Arenal — New Arenal — which today sits on the northern shore of the lake. Tronadora was also rebuilt further uphill. But the buildings themselves were left behind. The churches, the foundations, the roads, the graveyards — all of it was left in place when the valley flooded.

During unusually dry years, when the lake's water level drops significantly, parts of the old towns become visible again. Stone foundations emerge along the shore. The cross from the old church of Tronadora has, on rare occasions, poked above the surface. Locals who grew up in Nuevo Arenal still remember their parents pointing at the water and describing the streets of a town that no longer exists above the waterline. Some divers have explored the submerged structures, though the water is murky and the sediment disturbs easily.

When the water is low, the old town comes back. You can see the foundations, the edge of the cemetery, the road that used to go into the valley. It is like the past refuses to stay buried.

It is one of the strangest facts about Costa Rica that very few guidebooks mention. The biggest lake in the country is not really a lake — it is a drowned valley, with two ghost towns at the bottom of it.

Powering a Country: The Hydroelectric Story Most Visitors Miss

The whole reason Lake Arenal exists is electricity. In the 1970s, Costa Rica needed reliable power to modernize its economy, and its mountains and rivers offered an obvious solution: hydroelectricity. Engineers identified the Arenal Valley as ideal. It had high rainfall, it narrowed at one end — perfect for a dam — and it sat at the right elevation to drive turbines downhill toward the Pacific lowlands.

The Arenal-Corobicí-Sandillal hydroelectric complex that resulted is still one of the most important power systems in the country. Water from Lake Arenal is released through tunnels drilled straight through the mountains and flows downhill into smaller dams and turbines at Corobicí and Sandillal. The same water generates electricity three times before being used to irrigate agricultural land in Guanacaste. Together, the complex produces roughly 12 percent of Costa Rica's electricity.

That is a big part of why Costa Rica runs on more than 98 percent renewable energy in most years. Lake Arenal is not just scenery — it is infrastructure. The next time you turn on a light in a hotel in Tamarindo or Nosara, there is a decent chance the electricity came from the lake you drove past on the way in.

The Scenic Drive Around Lake Arenal: From La Fortuna to Tilarán

Most tourists come to La Fortuna and never drive further west than the dam. That is a mistake. The road that wraps around the northern shore of Lake Arenal — Route 142 — is one of the most beautiful drives in Costa Rica, and almost nobody talks about it.

It is approximately 70 kilometers from La Fortuna to Tilarán via the lakeside route. The drive itself takes around two hours if you do not stop. If you do stop — and you should — it easily turns into a full day. The road hugs the water, climbs through cloud forest, opens onto panoramic viewpoints, and passes through small towns that feel like a completely different Costa Rica from the one you see in La Fortuna.

• Arenal Dam: The eastern starting point, with a lookout over the lake and the volcano standing behind you
• Mystico Hanging Bridges: Cloud forest walks with views of both the lake and the volcano
• Sky Adventures Arenal: Tram and zip-line park on the way out of the La Fortuna side
• Hotel Los Héroes: A Swiss-style lodge with a miniature train that runs around its grounds — yes, really
• Nuevo Arenal: A lakeside town with German-Tico bakeries, colorful murals, and lakeside restaurants
• Tom's Pan: A decades-old German bakery serving pretzels, strudel, and dark bread by the lake
• Moya's Place and Gingerbread Restaurant: Two long-standing lakeshore favorites for lunch or dinner
• Tilarán: The town at the western end, the gateway to Guanacaste and the windsurfing capital of the lake

The road surface is fully paved and in good condition. There are a few steep sections and blind curves, so take your time. Driving it in a rental car is perfectly possible, but it is also one of the best routes to do with a private driver — you can stop wherever you want without worrying about navigation, parking, or missing a viewpoint.

Nuevo Arenal: The Tico Town With European Roots

Nuevo Arenal is the surprise of the drive. On the surface it looks like a small Costa Rican lakeside village, but once you start walking around, you notice something unusual. There is a German-style bakery. There is a deli selling imported cheeses and sausages. There are retirees speaking German, Dutch, and English on the street. There is a microbrewery. There are boutique hotels run by people who clearly did not grow up in the area.

The reason is simple. Starting in the 1980s, after the lake filled in, Nuevo Arenal attracted a wave of European and North American retirees and expats. They were drawn by the climate — the lakeside area is cooler and breezier than the lowlands, sitting at around 600 meters of elevation — and by the spectacular views. Over the decades, a small but persistent international community grew around the town.

The result is a place where you can eat a home-style casado for lunch at a local soda and then walk two blocks to buy fresh sourdough at a bakery run by a German expat. It is bizarre, charming, and unlike any other town in Costa Rica.

One of the World's Top Windsurfing Destinations

From roughly December through April, something remarkable happens on Lake Arenal. The trade winds that blow from east to west across Costa Rica hit the mountains, funnel down into the Arenal Valley, and accelerate as they cross the open water. The wind is so consistent and so strong during these months that Lake Arenal is routinely ranked among the top inland windsurfing destinations in the world.

Winds regularly reach 30 to 40 knots at the western end of the lake, especially near Tilarán. Professional windsurfers and kitesurfers travel here every year specifically to train during the European winter. Wind schools have been operating on the lake since the 1980s, and there are still several outfits in the western end offering lessons, equipment rentals, and multi-day packages.

The best wind is typically in the afternoon. The best spots are along the western and southwestern shores. The best months are December, January, February, and March. And unlike ocean kitesurfing, the lake has no saltwater corrosion on your gear and no tidal currents to worry about — making it a favorite for anyone who wants consistent flat water or chop with mountain scenery in the background.

Beyond Wind: Everything Else You Can Do on the Lake

If you are not a windsurfer, the lake still has plenty to offer — and most of it is much more accessible. Arenal is home to one of Costa Rica's most prized freshwater fish, the guapote (rainbow bass), and sport fishing tours operate from several lakeside marinas. You can rent stand-up paddleboards and kayaks from Nuevo Arenal and paddle out into calm morning water with the volcano in the distance. There are boat tours that cross the lake from east to west, used both as a tourist experience and as a legitimate way to reach Monteverde.

• Guapote fishing: Costa Rica's most famous freshwater sport fish, caught in only a handful of lakes including Arenal
• Stand-up paddleboarding: Morning sessions on glassy water with volcano views in the background
• Kayaking: Calm waters in the eastern end, more challenging paddles further west when the wind picks up
• Scenic boat tours: Cruises across the lake with volcano sightings and wildlife spotting
• Kitesurfing and windsurfing schools: Concentrated around the Tilarán end from December to April
• Lakeside horseback riding: Several ranches offer trail rides along the northern shore
• Birdwatching: Herons, ospreys, kingfishers, and the occasional toucan along the shoreline

La Fortuna Side vs. Lake Side: Where Should You Actually Stay?

Here is a question most travelers never think to ask: if you are visiting the Arenal area, should you actually stay in La Fortuna? Or should you stay on the lake?

The vast majority of tourists book hotels in or near La Fortuna town. It is the default choice, and it makes sense for most visitors. La Fortuna has the biggest concentration of restaurants, the closest access to the waterfall, the best supermarkets, and it is the logistical hub for every major tour. If you only have two nights in the area, stay in La Fortuna.

But there is a strong case for staying on the lake side instead, especially if you have three or more nights. Hotels along the lake shore — near Nuevo Arenal, El Castillo, or the southern road around the dam — often have dramatically better views, more tranquility, cooler temperatures, and lower prices for comparable quality. You trade some convenience for a lot more atmosphere.

• Stay in La Fortuna if: it is your first visit, you have only 1-2 nights, you want to walk to restaurants, or you plan to do multiple tours per day
• Stay on the lake if: you are a returning visitor, you have 3+ nights, you want romantic or honeymoon vibes, or you value quiet and scenery over logistics
• El Castillo (south side of the lake): Remote, quiet, spectacular volcano views, very limited dining — rent a car
• Nuevo Arenal (north shore): More amenities, international food scene, cooler climate, lakeside restaurants
• Outskirts of La Fortuna (between town and the dam): Closest to hot springs and tours, more hotels at every budget

The ideal trip, if you have time, is to split your stay — two nights in La Fortuna for the activities, two nights on the lake for the sunsets and the silence.

The Jeep-Boat-Jeep: The Old Way to Cross the Lake

One of the most unique experiences in Costa Rica is something called the jeep-boat-jeep transfer. It is the traditional way to travel between La Fortuna and Monteverde, and it uses the lake as its middle section. A vehicle takes you from La Fortuna to the eastern shore. A boat crosses the length of the lake — volcano behind you, mountains ahead. Then a second vehicle picks you up on the western shore and climbs the winding roads up into Monteverde's cloud forest.

The total journey takes about three to three and a half hours and cuts what would otherwise be a longer drive around the lake nearly in half. It is also one of the best ways to actually experience Lake Arenal — you spend an hour or more on the water, with the volcano in full view the entire time.

Getting to Lake Arenal

Lake Arenal is accessible from three main directions. From San José, the drive takes about three hours to the eastern end of the lake near La Fortuna. From Liberia, it takes around two and a half hours via Cañas and Tilarán to reach the western end. From Monteverde, the lake is roughly two hours by road, or three hours including the traditional jeep-boat-jeep transfer.

The lakeshore road itself (Route 142) connects everything and is in good condition the entire way. A rental car works fine if you are comfortable with Costa Rican mountain driving. A private shuttle works even better if you want to take photos, stop at viewpoints, and actually look at the scenery instead of the road.

We drive this route every week. We know where to stop, which restaurants are open, which viewpoints are worth the detour, and which road conditions change with the season. If you want to see Lake Arenal the way locals see it — not just as a backdrop to a photo, but as the layered, storied place it actually is — let us drive you.

The lake is not just something you look at. It is something you understand, one story at a time — the town beneath it, the electricity it generates, the winds that cross it, and the road that wraps all the way around. That is Lake Arenal.