Madang's lagoon is the defining feature of the town — a stretch of protected water between the peninsula and the offshore reef that gives the town its mild, sheltered harbour character. The lagoon is warm, clear, and calm, sheltered from the open sea swell by the barrier reef. Snorkelling directly off the shoreline is possible in several places, and the variety of fish and coral is high.
The lagoon is also the setting for most of Madang's leisure boating: fishing trips, island transfers, and diving excursions all depart from the town's small waterfront. At dawn and dusk, outrigger canoes cross the lagoon between the mainland and the offshore islands, and the light on the water at these hours is exceptional.