It is one of seven major estuaries along the Gulf Coast of Texas and serves as the mouth of numerous streams, most notably the Lavaca and Colorado Rivers.

The wildlife serves as a basis for the birding and fishing tourism, and is an essential component of the production of seafood, specifically shrimp and blue crab, which are the specialties of the area.

Early European records suggest that the bay and the surrounding area went by the names Espíritu Santo and Costa y Bahía de San Bernardo.

In 1685, French explorer René-Robert Cavelier, Sieur de La Salle established the colony of Fort St. Louis along the bay's shore after missing the entrance to the Mississippi River.

The Great Comanche Raid of 1840 destroyed the town and forced the inhabitants to flee to the nearby Labbacca, which would later become known as Port Lavaca.

As a result, Lavaca was surpassed by Indianola as the main port on Matagorda Bay in the 1850s, even though the sandbars were dredged later in the decade.

Flooding and drainage issues caused by the Colorado River, which at the time emptied into the bay, precipitated a massive dredging campaign in the 1920s.

Flooding was not remedied by the dredging, as sediment deposited in the bay and formed a tidal marsh that grew at 500 acres (2.0 km2) a year.

[12] On average, the Matagorda Bay system is 2 meters (6.6 ft) deep, and covers approximately 1,093 square kilometers (422 sq mi).

Water exchange with the Gulf of Mexico occurs at Pass Cavallo, Matagorda Ship Channel, Greens Bayou, the Colorado River Delta Complex and Brown Cedar Cut.

The Mad Island-Oyster Lake conservation area, located on the eastern shore of Matagorda Bay, is a habitat for over 300 species of birds including songbirds, shorebirds and waterfowl.

[12] According to Texas Parks and Wildlife, the following fish have been caught in the bay: striped bass, gafftopsail catfish, Atlantic croaker, black drum, red drum, southern flounder, barred grunt, hake, skipjack herring, crevalle jack, ladyfish, Gulf menhaden, pigfish,[16] smooth puffer, sand seatrout, spotted seatrout, blacktip shark, gray snapper, southern stingray, Gulf toadfish and tripletail.

[11] The Matagorda Bay system is a renowned fishing location in the region, due to its status as a nutrient-rich estuary.

The Aluminum Company of America, Union Carbide, Du Pont, and Formosa Plastics all established plants in Point Comfort.