Established in 1973, the national park is named after Eduardo Avaroa (1838–1879), the Bolivian war hero of the 19th century. It was created by Supreme Decree (SD) of 13 December 1973 and extended on May 14, 1981. Since 2009, the entire reserve is part of the larger Los Lípez Ramsar site.
The reserve is situated in the southern region of Andean mountains in southwestern Bolivia. The mountains rise to heights varying from 3,500–5,000 m (11,500–16,400 ft). The basin features depict active volcanoes, hot springs, geysers and fumaroles, and a parallel has been drawn with the Yellowstone National Park in the US. Its water resources are limited to lakes and salt water lagoons due to very low rainfall of 76 mm (3.0 in) annually. Two communities, Quetena Chico and Quetena Grande, lie within the reserve.
Lakes include Laguna Verde, Laguna Colorada, Laguna Salada, Laguna Busch and Laguna Hedionda. Laguna Colorada lies at an altitude of 4,278 m (14,035 ft) and covers 60 km2 (23 sq mi). It is named after the effect of wind and sun on the micro-organism that live in it. The lake is very shallow, less than 1 m (3 ft 3 in) deep, and supports some 40 bird species, providing pink algae to population of rare James’s flamingoes who can walk across it.
An unusual natural feature of attraction (much photographed) in the reserve is an isolated rock formation projecting out of the sand dunes of Siloli at a place known as Árbol de Piedra. It is about 18 km (11 mi) north of Laguna Colorada. It is known as the “Stone Tree” as it is in the shape of a stunted tree, which is formed as a thin rock due to strong wind action.
The climate in winter (May to August) is dry, generally with no rain during the summer (December to April). The average temperature is 3 °C (37 °F). The lowest temperatures are recorded during the months of May, June and July.