The community of Crescent Lake was originally located along the Southern Pacific Railroad line, 2 miles (3.2 km) south southwest of present-day Crescent Lake Junction. The former site was built following the completion of a railroad section in 1923 (opened in 1926) called the Natron Cutoff in the Cascade Range. This section replaced the route through the Siskiyou Mountains for trains traveling between the Willamette Valley and California. The community of Crescent Lake was built to serve the steam trains that ran on the line until the 1950s and to maintain the tracks and signals over the adjacent section of the main line.
Crescent Lake also served as a divisional meeting point where freight train operations were passed on to new crews. Trains traveling from Oregon to California were manned by crews from Eugene in the Willamette Valley up the "hill" to Crescent Lake, where Klamath Falls crews relieved them to continue the journey to Dunsmuir in Northern California. Crews running trains in the opposite direction were similarly relieved at Crescent Lake. Each of the relieved crews remained at Crescent Lake for a mandatory rest period, after which they relieved an arriving crew and returned to their respective home locations.
The site included a train depot, a roundhouse, accommodation for resting train crews known as the "clubhouse", two general stores (one with a tavern), a restaurant, a one-room schoolhouse and a post office. The local railway staff consisted of a full section gang (supervisors), a signalman, an electrician, a station agent and shift operators, a train driver, a yard master and several other tradesmen. After World War II, the community began moving to its current location along Oregon Route 58, which had been completed a few years earlier in 1940. In 1958 the roundhouse was decommissioned and soon demolished and in 1970 a fire at the restaurant destroyed the remaining businesses on what is now known as Crescent Lake Highway. A few dilapidated homes remained occupied along Crescent Lake Highway into the 1990s. However, the local fire department intentionally destroyed what remained of the ghost town during a training exercise. All that remains of the former site is a water tower and a parking lot for winter recreation. The local post office was located in the "Odell Sportsman" general store, it was destroyed in a fire on January 23, 2009, but is now back in operation..
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