The bay faces Cook Strait, stretching north–south over a distance of 30 kilometres (19 mi) from the southern extremity of the Marlborough Sounds (Port Underwood) to White Bluffs.

Fifteen minutes drive from central Blenheim is the coastal community of Rārangi which consists of an original beachfront settlement in the northern end of Cloudy Bay which ranges from the typical New Zealand bach or crib along with some high quality homes.

It also has a newer large subdivision within the central part of Cloudy Bay nearer to the coastal man-made river which is known as the Wairau Diversion.

[2] Sealers first visited about 1826 and set up stations at Port Underwood, the deep inlet at the north of the bay.

[2] They were followed by whalers with John Guard setting up a whaling station at Port Underwood in 1828 with his ship Waterloo.