The lake is within the boundaries of the Ansel Adams Wilderness of the Sierra National Forest and Inyo National Forest. Thousand Island Lake sits at the base of Banner Peak in the Ritter Range. It is the source of the Middle Fork of the San Joaquin River, which flows southeast, and then west, into the San Joaquin Valley. The lake is a glacial tarn, formed in the bottom of a cirque when a glacier retreated.