Twizel was built in greenfields project to service the Upper Waitaki hydroelectricity Scheme and was intended to be removed once the project had been completed. However, in 1983 its residents successfully fought to save the town. At the height of the project in the 1970s, the population peaked at around 6,000.
Prior to 1968, where Twizel now stands was farmland. The town was laid out in a 'Scandinavian' fashion, where the shops, school, and recreational parkland fromed a hub in the centre of the town, around which the residential area lay. This design style also features looping roads and pedestrian ways, making it usually far more direct to walk than use a car. A previous version of this layout had originally been tried at Otematata. Originally, it was intended that the houses for the engineers would be built near Lake Pukaki but they were eventually built in Twizel. Accommodation was highly segregated, however. In addition to singlemens' quarters in the middle of town, there were a series of different houses available, with the smallest for workers, staff houses for teachers and professionals, and the largest for engineers and other high status residents. Most houses were prefabricated, and intended to be portable. Some were brought from Otematata, and some were moved to Clyde for the next hydro project.
 Map of Twizel in context of surrounding lakes.
Map of Twizel in context of surrounding lakes.
Because the original intention was for the town to be reverted to farmland , there were many 'temporary' features to the town. For example, instead of putting in kerbing, chanels, and footpaths at the edge of the road, a single expanse of seal was contoured in a very flat 'W' shape. That is, the seal was highest at the outer edge (footpath) and in the middle (centreline), with a lower area serving as a channel and delineation between the roadway and footpath.
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