After the end of the Second World War, the government had an intention to build a large power plant, particularly a hydropower plant which could generate electricity into the system rapidly. The committee on power plant construction was established to make a survey and a feasibility study all over the country on the appropriate construction site of the power plant. The study revealed that Yanhee Valley in Ping River in Sam Ngao District, Tak Province was the most suitable area. The result of the study led to the construction of Yanhee Dam in 1957. In the same year, Yanhee Electricity Authority was established to be responsible for the dam construction and electricity generation for the central and northern parts of Thailand.
On July 25, 1957, His Majesty King Bhumibol Adulyadej gave royal permission to use the auspicious name “Bhumibol” for the dam. On May 17, 1964, after the completion of the construction, His Majesty King Bhumibol Adulyadej accompanied by Her Majesty Queen Sirikit performed the opening ceremony of Bhumibol Dam and pressed the starting button of the first power generator.