Yarra Bay is located on the northern side of Botany Bay in the suburb of Phillip Bay, approximately seven kilometres south of the centre of Sydney. The bay has a south-westerly orientation, making it unique among Sydney beaches. The southern boundary of Yarra Bay is defined by Yarra Point, and Bumborah Point forms the northern limit.

Yarra Bay House, on Yarra Point, overlooks the beach. It is occupied by the local Aboriginal Land Council. At the southern end of the beach is the Yarra Bay 16 Foot Sailing Club. Further along the grassed fore dune area is a sandstone monument commemorating the landing of Governor Philip. It was here on 19 January 1788 that indigenous people directed Governor Phillip to a water source, now named Bunnerong Creek.

Yarra Bay beach is not patrolled by lifeguards.