Cloudy Bay is located at the northeast of New Zealand's South Island, to the south of the Marlborough Sounds. It is one of the country's best known vineyard areas.

The bay faces Cook Strait, stretching north-south over a distance of 30 kilometres from the southern extremity of the Marlborough Sounds to White Bluffs. Along its length is the delta of the Wairau River, which reaches the sea at two points. The southern of these forms an entrance to the Big Lagoon, just to the north of White Bluffs. eight kilometres inland from the bay lies the town of Blenheim, the main centre of the Marlborough region.

The lower reaches of the Wairau River (and the smaller neighbouring Opawa River) flow through fertile alluvial plains. This land, coupled with the region's Mediterranean-like climate, are responsible for the production of some of New Zealand's finest wines, notably sauvignons blancs and chardonnays.