The lagoon is connected to the Indian Ocean by a narrow channel to the north, near the town of Thondamannar.

There is a sluice gate at Thondamannar to prevent sea water entering the lagoon.

[1] The lagoon is surrounded by a densely populated region containing palmyra palms, coconut palm, grassland, rice paddies, arid scrubland, and open forest.

The Vadamarachchi lagoon has extensive mudflats, seagrass beds and mangrove swamps, particularly Avicennia.

The lagoon attracts a wide variety of water birds including American flamingoes, ducks, gulls, terns and other shorebirds.