The Wagonga Inlet is what makes Narooma's geography so distinctive — the town sits on a peninsula between the inlet to the west and the ocean to the east, with water visible in almost every direction. The inlet itself is a long, calm tidal estuary stretching several kilometres inland, fringed with mangroves and spotted gum forest. Water clarity is excellent and the colour in afternoon light is remarkable — a green-blue that the town's Aboriginal name attempts to capture.
The inlet is the best place for kayaking: no surf, easy access, and plenty of wildlife. Dolphins are common, particularly in the morning. Bream, flathead, and bora are caught throughout; the estuary is also known for prawning runs. Several operators rent kayaks and stand-up paddleboards from the waterfront. The inlet connects to the ocean through a narrow channel under the highway bridge — a navigational challenge for boats but a dramatic piece of scenery.