Rainbow Lake Vacation - Deals & Packages!Rainbow Lake is a town in the northwest Alberta, Canada. It is located west of High Level at the end of Highway 58 in Mackenzie County. It derives its name from its proximity to Rainbow Lake along the curvy Hay River. Rainbow Lake is a town with a relatively recent origin, thanks to an oil boom here. The city is good for camping and fishing. The town charms the visitors by the beauty of its forest and abundant wildlife.