The bay was named after lime kilns, located on the east side of Corio Bay, used to burn limestone for making cement.

In the 1820s, explorers Hume and Hovell ended their journey in the area of Limeburners Bay before returning to Sydney.

The area is popular for recreational fishing and hiking and birdwatching.

It forms part of the Port Phillip Bay (Western Shoreline) and Bellarine Peninsula Ramsar Site as a wetland of international importance.

The site is part of the Werribee and Avalon Important Bird Area, identified as such by BirdLife International because of its importance for wetland and waterbirds as well as for orange-bellied parrots.