Tucked into the far northwest corner of Alberta, Rainbow Lake sits at the end of Highway 58, west of High Level, within the boundaries of Mackenzie County. The community owes its existence to the discovery of a nearby oil field in 1965, after which the town was established to support the growing petroleum industry in the region. Residents and visitors can also reach the area by air through the Rainbow Lake Airport (IATA: YOP, ICAO: CYOP), which continues to serve the community. The town takes its name from the neighbouring Rainbow Lake, a body of water formed on the Hay River and named for its distinctive curved shape, which resembles a rainbow when viewed from above.
Covering a land area of 10.76 km2, Rainbow Lake recorded a population of 495 residents in the 2021 Census, reflecting a significant decline of 37.7% from the 795 people counted in 2016. That 2016 figure itself represented a drop of 8.6% from the 870 residents tallied in 2011, while a 2015 municipal census placed the population at 938, down from 1,082 in 2007. Population density as of 2021 stood at 46.0 residents per km2. The town is home to Rainbow Lake School, operated by the Fort Vermilion School Division, offering classes from kindergarten through grade 12.