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In Canadamarker, an Indian reserve is specified by the Indian Act as a "tract of land, the legal title to which is vested in Her Majesty, that has been set apart by Her Majesty for the use and benefit of a band." The Act also specifies that land reserved for the use and benefit of a band which is not vested in the Crown (for example, Wikwemikongmarker Unceded Reserve on Manitoulin Islandmarker) is also subject to the Indian Act provisions governing reserves. Superficially a reserve is similar to an Americanmarker Indian reservation, although the histories of the development of reserves and reservations are markedly different. Although the American term reservation is occasionally used, reserve is normally the standard term in Canada.

The terms Native reserve, First Nations reserve and First Nation are also widely used instead of Indian reserve. Strictly speaking, however First Nation more properly designates a group which may occupy more than one reserve. For example, the Munsee-Delaware Nationmarker in Ontariomarker is only one of three reserves in Western Ontario occupied by members of the Munsee-Delaware First Nation. In all, there are over 600 occupied reserves in Canada, most of them quite small in area.

The Indian Act gives the Minister of Indian Affairs the right to "determine whether any purpose for which lands in a reserve are used is for the use and benefit of the band." Title to land within the reserve may only be transferred to the band or to individual band members. Reserve lands may not be seized legally, nor is the personal property of a band or a band member living on a reserve subject to "charge, pledge, mortgage, attachment, levy, seizure distress or execution in favour or at the instance of any person other than an Indian or a band" (section 89 (1) of the Indian Act). As a result reserves and their residents have great difficulty obtaining financing. Canada Mortgage and Housing Corporation (CMHC) has, however, created an on-reserve housing loan program in which members of bands which enter into a trust agreement with CMHC and lenders can receive loans to build or repair houses. In other programs loans to residents of reserves are guaranteed by the federal government.

Provinces and municipalities may expropriate reserve land only if specifically authorized by a provincial or federal law. Few reserves have any economic advantages, such as resource revenues. The revenues of those reserves which do are held in trust by the Minister of Indian Affairs. Reserve lands and the personal property of bands and resident band members are exempt from all forms of taxation except local taxation. Corporations owned by members of First Nations are not exempt, however. This exemption has allowed band members operating in proprietorships or partnerships to sell heavily taxed goods such as cigarettes on their reserves at prices considerably lower than those at stores off the reserves. Most reserves are self-governed, within the limits already described, under guidelines established by the Indian Act.

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