The Jaguarão/Yaguarón, Tacuarí and Cebollatí Rivers empty into Lagoon Mirim, while the São Gonçalo Channel connects it with Lagoa dos Patos to the north.

It is more irregular in outline than its larger neighbor to the north, Lagoa dos Patos, and discharges into the latter through São Gonçalo Channel, which is navigable by small boats.

Both lagoons are the remains of an ancient depression in the coastline shut in by sand beaches built up by the combined action of wind and oceanic currents.

They are at the same level as the ocean, but their waters are affected by the tides and are brackish only a short distance above the Rio Grande outlet.

The Jaguarão/Yaguarón River, which forms part of the Brazil-Uruguay boundary line, empties into Lagoon Mirim, and is navigable 42 km (26 mi) up to and beyond the twin towns of Jaguarão (Brazil) and Rio Branco (Uruguay).