Derby Dam, constructed under Specification Number 1 and Drawing Number 1 of the U.S. Reclamation Service, now the U.S. Bureau of Reclamation, diverts the flow of the Truckee River for irrigation use. It was the forerunner of such mighty structures as Hoover, Grand Coulee, Shasta and Glen Canyon Dams.

Derby Dam was authorized by Secretary of the Interior E.A. Hitchcok on March 14, 1903. It is a part of the Newlands Project named in honor of Nevada Senator Francis G. Newlands, who worked for passage of the Reclamation Laws in 1902. Derby takes its name from a nearby Southern Pacific Railroad station of the day.

Charles A. Warren & Company of San Francisco, the contractor, started work on the dam on October 2, 1903, and finished May 20, 1905. Operational water diversions began in 1906.