Rusty Creek and the lakes are part of the Waterhen River drainage basin.

The Waterhen River is a tributary of the Beaver River, which flows north into Lac Île-à-la-Crosse and the Churchill River, a major tributary in the Hudson Bay drainage basin.

[5][6] Several streams feed into Peitahigan Lake, including ones that drain the southern slopes of the Mostoos Hills.

[7] The outflow is a short east-flowing creek that flows into Third Mustus Lake.

[9] Fish species found in the lake include lake whitefish, northern pike, and walleye.