Karangi Dam was built in 1980 to service the residents of Coffs Harbour, Sawtell and the coastal strip north of Coffs Harbour, including Woolgoolga.

It was originally designed to store 2200 megalitres of water pumped from Cochranes Pool on the Orara River.

Due to a growing population and water demand in this region, in 1988, the Department of Public Works & Services raised the dam by adding a 1.5 metre high Labyrinth Weir to the existing spillway & an extra 1 metre to the top of the dam. This increased the capacity to 2630 megalitres.

After many years of water restrictions it was decided to raise Karangi Dam a further 10 metres in 1994, as an emergency measure, until a Regional Water Supply Scheme was finalised. Raising the dam increased the capacity to 5600 megalitres.