Caballo derives its name from the wild horses that roamed the area, descendants of horses brought here in the 1540s by the Spanish, Sierra De Los Caballos, is Spanish for "Mountains of the horses". The original community of Caballo dates back to 1908 when John Gordon and his family homesteaded the area. The post office at Caballo was established in 1918. The current township of Caballo is an 18 mile strip along Hwy. 187 in 1938, when the lake north of Caballo Dam began to fill, it covered the homes of the original residents of Caballo. Most of those families moved to the foothills of the west side of the Rio Grande river.
Caballo Lake has the capacity to hold 331,500 acre feet of water. When the lake is full it extends 18 miles north to Williamsburg. Caballo Lake enjoys the reputation of being a quiet, friendly lake, a family place. Pressure from jet skiers and water skiers is minimal. Fishing is the order of the day. Caballo is well known for it's excellent Bass and Walleye fishing. Large mouth are abundant and occasional Stripers are pulled from the lake. The largest striper weighed 51 lbs. and was caught by John Cross of Truth or Consequences, NM in April of 1996. Catfish, Crappie, Bluegill and Perch are also common to the lake. There are two boat ramps and a visitor center at Caballo Lake State Park.
The radio and TV towers on Timber Mountain mark the highest point in the Caballo mountains, with an elevation of 7565 feet. A common TV antenna pointed at the towers will bring in most Las Cruces and Albuquerquestations.
Located across Caballo Dam on the east side of Caballo Lake is the old placer gold district of Shandon. Gold is found in active drainage's and bank deposits along the arroyos. Pin to match head size grains are found be weekend prospectors. Shandon district gold is the purest placer gold found in New Mexico. Several gold mines still operate in the area. Mining in the Caballo mountains has included copper, gold, lead and vanadium.
Caballo Lake is a narrow impoundment of the Rio Grande river, it lies sixty miles north of Las Cruces, New Mexico and is a premier birding location in the southwest. Caballo Lake hosts a variety of wintering species. Eared, Western and Clark's Grebes, American White Pelican, Snow, Ross's and Canadian Geese, Ducks, Sand Hill Crane and an assortment of gull species. Neotropic Cormorant is resident. At last count approximately 41 Bald Eagles reside in the lake area.
Percha Dam, below Caballo Dam, is a small, low-level structure built in 1917 to irrigate farms of the lower valley. The Rio Grande river below the dam offers great river fishing.