The lake was formed from the crater of a large volcano in the Taupo Volcanic Zone. Its last major eruption was about 240,000 years ago. After the eruption, the magma chamber underneath the volcano collapsed. The circular depression left behind is the Rotorua Caldera, which is the site of the lake. Several other lakes of volcanic origin are located nearby to the east, around the base of the active volcano Mount Tarawera.