McPhee Reservoir is located in Montezuma County, Colorado, United States. It was constructed and is operated by the United States Bureau of Reclamation as part of the Dolores Project, and dams the Dolores River to furnish irrigation water for Montezuma and Dolores counties and the Ute Mountain Ute Indian Reservation. McPhee Reservoir is named for McPhee, Colorado, a company town founded by the that is now submerged under the reservoir. In 1927, the McPhee sawmill produced over half of Colorado's lumber. The town housed up to 1,500 employees. The sawmill closed in 1946.