Bird distribution and vegetation were studied at a dam lake (Higashi-Arakawa dam lake, Shioya-Cho, Tochigi prefecture) and a nearby natural lake (Lake Yunoko, Nikko, Tochigi prefecture) in Japan to find out the characteristics of dam lake's avifauna and to make plans to improve its environment as habitat for birds. The vegetation around the dam lake was more patchy than that of the natural lake, and dam lake's shore area was mainly composed of young-aged shrub, annual herb, bare soil and rock. There was no emerged plant community in the lake's shore. Birds seen near the dam lake were mainly species that prefer open land and bushes. On the other hand, the natural lake's shore was mainly surrounded by mature coniferous, deciduous and mixed forest, and in the lake's shore there were some communities of emerged plants. Many birds including forest-living and wetland species were observed near the lake shore. We proposed the following measures to improve dam lake's environment as habitat for birds: 1) conservation of wild trees at the time of dam construction, especially near the maximum water level, 2) creation of wetlands without water level change or construction of artificial floating islands to facilitate the establishment of emergent plant communities along the lakeshore.