The dam was proposed to provide flood regulation and reliable water supplies for South Australia, which pumps water from the lower Murray through pipelines across the Mount Lofty Ranges to Adelaide, and parts of the Mid North, Yorke Peninsula and Eyre Peninsula. It was announced on 21 April 1960 by Tom Playford, the Premier of South Australia.
It had been agreed by the River Murray Commission in September 1961 and governments of South Australia, Victoria, New South Wales and Australia in 1963. A preliminary meeting was held on 16 April 1962 to start discussion on Chowilla Dam. Participants in that meeting were Prime Minister of Australia Bob Menzies, Premier of South Australia Tom Playford, Premier of Victoria, Deputy Premier of New South Wales and Minister for Development Jack Renshaw, Treasurer of Australia Harold Holt, Minister for National Development Bill Spooner. The follow-up meeting at which an agreement was reached was held on 19 November 1962. Participants were Spooner (also President of the River Murray Commission) and Menzies for the Commonwealth, Renshaw and George Enticknap for NSW, Premier of Victoria Henry Bolte and Premier of South Australia Thomas Playford. The four governments would share the costs evenly, however the Commonwealth would extend a loan for the New South Wales component in exchange for water from the Menindee Lakes during construction.
The reservoir would have been 55 miles (89 km) long and up to 20 miles (32 km) wide with a surface area of 530 square miles (1,400 km2) due to the flat terrain. The dam wall would have been 18,000 feet (5,500 m) long and the reservoir depth up to 55 feet (17 m) with a capacity of 5.06 million acre feet (6,240 Gl). The reservoir would have been approximately 45 square miles (120 km2) in South Australia, 160 square miles (410 km2) in Victoria and 195 square miles (510 km2) in New South Wales.
The dam was proposed to be an earth embankment up to 50 feet (15 m) high and 18,000 feet (5,500 m) long. It would include a concrete spillway 800 feet (240 m) long and a navigation lock. The lock was removed to save cost in later versions of the plans before the project was cancelled. The embankment would block the Murray River and both Chowilla Creek and Monoman Creek in the Chowilla floodplain. Most of both the impervious core and the compacted sand shoulders of the dam embankment would be sourced from local materials of specific layers of soil. There would also be an 80 foot (24 m) deep cut-off wall under the concrete spillway and lock to reduce seepage.
The plan to deal with the highly saline groundwater was to drill relief wells and drains, and pump it to evaporation ponds several miles away. This is similar to what has been done more recently at several points along the Murray for what are now known as "salt interception schemes". Rock would need to be transported from further away to provide protective riprap, filters, and aggregate in concrete and bituminous membrane. This would be transported by rail from 150 miles (240 km) away.