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Originally home to tribes of Native Americans, the park derives its name from Chief Shabbona. Pioneer settlement of the area began in the 1830s. From Shabbona Grove, in the southeast corner of the park, homesteaders spread over the region and began farming the rich soil.

In 1965, a decision was made to develop a lake and recreation area on the site, and land acquisition began in 1969. By 1978, 1,550 acres had been obtained. In 1973, the lake area was cleared of trees, the shoreline was modified and earthen fishing piers and fish congregators were erected. By 1975, a 3,000-foot-long earthen dam with a concrete spillway was completed and the lake was formed. Day use facilities were constructed in 1976 and continue to serve the public today. A restaurant, boat rental and bait and tackle facility opened for business in 1995. This facility provides a sit-down eating area serving breakfast, lunch and dinner as well as a fully stocked bait and tackle shop. Boat rentals include boats with and without motors.