Once important as a lumber-producing center, Kapowsin depends upon recreation trade for its major source of income. Small logging operations employ a few of the inhabitants.

After a decline in the timber industry, Kapowsin diminished in size into a neighborhood center, with a store, tavern, post office, fire station and grange hall.

The town overlooks Kapowsin Lake, northernmost lake in the fishing and recreation area known as the Blue Water Lakes District, which includes Tanway, Ohop, Clear, and several smaller lakes where resorts, campgrounds, and swimming and boating facilities are available. Beavers have constructed a whole series of dams around the outlet of the lake.

The lake encompasses over 500 acres and provides fishing for trout, crappie, and bass. There are boat launches along the west bank and Nearby Erickson’s resort provides boat rentals.

The name of the lake was related to a Native American work for shallowness, referring to the large marshy areas at the northern end of the Lake.