The lake's most distinctive feature is the three great arms that extend westward from the main body of water: North Fiord, Middle Fiord, and South Fiord. These are true inland fiords, glacially carved valleys that penetrate deep into the Kepler and Murchison Mountains. Several small islands cluster at the entrance to Middle Fiord, which forks partway along its length into northwest and southwest arms. The main body of the lake runs north-south for 65 kilometers, but the western arms add substantially to the total shoreline, creating a landscape of hidden bays, remote beaches, and forested peninsulas accessible only by boat. The Kepler Mountains rise 1,400 meters above the lake's western shore, their slopes dense with southern beech forest that extends unbroken to the ridgeline. Along these shores, within the boundaries of Fiordland National Park and the Te Wahipounamu World Heritage Site recognized by UNESCO in 1990, the only sounds are birdsong, wind, and water.

Long before Europeans reached Fiordland, the Ngai Tahu iwi used the Lake Te Anau basin as a waypoint on their trails between the east and west coasts of the South Island. These journeys through the mountains to harvest pounamu, food, and other resources followed routes that required intimate knowledge of the landscape and its seasons. European explorers Charles Nairn and William Stephen became the first non-Maori to see the lake in 1852. The name itself is Maori, and its meaning has been debated for generations. Many believed Te Anau was named for the granddaughter of Hekeia, a chief of the Waitaha tribe. But when the Te Ana-au Caves were rediscovered on the lake's western shore in 1948, a different interpretation gained favor: Te Ana-au, meaning "the cave of swirling water." The caves, a limestone system roughly 15,000 years old, feature underground rivers and a glowworm grotto that draws visitors across the lake by boat.

Between Middle Fiord and South Fiord, the Murchison Mountains form a natural sanctuary for the takahe, a large flightless bird with iridescent blue-green feathers and a bright red bill. The species was declared extinct in 1898, and for 50 years no one challenged the conclusion. Then in 1948, Geoffrey Orbell found a breeding colony in the remote tussock valleys of the Murchisons, a discovery that electrified New Zealand's conservation community. The Murchison Mountains Special Area was established to protect the takahe's habitat, and the area remains one of the most strictly managed conservation zones in the country. Other endangered species share the lake's watershed, and the understory forests support dense communities of native ferns, including the crown fern, Blechnum discolor. The western shore also hosts the Te Ana-au Caves, where glowworms illuminate limestone caverns that water has been sculpting for millennia.

Lake Te Anau anchors two of New Zealand's most celebrated tramping routes. The Milford Track begins at the lake's northern tip, where boats deposit trampers at the head of the Clinton Valley for a four-day walk through rainforest and alpine passes to Milford Sound. At the southern end, the Kepler Track starts and finishes at the Waiau River control gates, where Lake Te Anau's outflow begins its short journey south to Lake Manapouri. These gates regulate water levels in both lakes, a function that became politically charged during the Save Manapouri campaign of the early 1970s. Beyond the Great Walks, the lake supports a summer culture of boating, fishing, kayaking, and swimming. The Marakura Yacht Club and the Te Anau Boating Club call its waters home, and every Labour Day weekend, a fishing competition draws anglers to test the lake's stocks of brown and rainbow trout. For a body of water this large and this deep, Lake Te Anau remains remarkably accessible, its southeastern corner only a short walk from the town that shares its name.