Milner Dam was authorized for construction as a privately capitalized venture under the 1894 Carey Act, a precursor to the 1902 Reclamation Act.Ira Burton Perrine, a local rancher, chose the site and recruited financial backers, including Salt Lake City banker Stanley B. Milner and eastern investors Frank H. Buhl and Peter L. Kimberly. The Buhl-Kimberly Corporation built the dam and the Twin Falls Canal in 1903-1905. Milner Dam's primary purpose is irrigation but it also produces hydroelectricity. It is currently owned and operated by Milner Dam, Inc.
The dam is 73 feet (22 m) high and 2,160 feet (660 m) long. The storage capacity of its reservoir, Milner Lake, is 36,300 acre feet (44,800,000 m3). The lake covers 4,000 acres (16 km²).
Inspections in 1988 indicated a high risk of dam failure in an earthquake. In order to pay for the $11 million cost of rebuilding the dam, the operating companies contracted with Idaho Power to build a 57.5 megawatt hydroelectric powerplant 1.5 miles (2.4 km) downstream from the dam, with Idaho Power in return loaning funds for the dam's reconstruction. The 1992 powerplant has 46 and 11.5 MW generators, with a small 800 KW generator for low-flow conditions. Water for the powerplant is drawn from the Twin Falls Canal during seasons when water is not needed for irrigation.