The entrance to Broken Bay lies between Barrenjoey Island at Palm Beach, and Box Head. The inlet has three arms, being the estuary of the Hawkesbury River from the west, Pittwater to the south, and Brisbane Water to the north. These three arms are flooded rivers (rias) formed when sea level was much lower than it is now.
James Cook recorded "broken land" seen, North of Port Jackson and named it Broken Bay. (just before sunset at 5 PM. 7 May 1770) However: “ The bay which the Captain named Broken Bay was not the one so called today, which lies at the mouth of the Hawkesbury River, for this was passed, unremarked, during the hours of darkness. Cook’s Broken Bay was only a few miles north of Port Jackson and near what is now known as the Narrabeen Lagoon. Matthew Flinders was the first to note the difference. Cape Three Points was about the northern head of the present Broken Bay…” Governor Phillip was the first to examined the present day Broken Bay in a longboat from the Sirius on the 2 March 1788. Matthew Flinders placed Cook's Broken Bay at 33° 42' South.
On November 28, 2005, documentary filmmaker Damien Lay claimed that the wreckage of a Japanese midget submarine, which disappeared after the attack on Sydney Harbour in 1942, was buried under sand on the seabed, just east of Lion Island. Lay claimed to have confirmed that copper wiring found at the site was consistent with that used in similar Japanese vessels. However, a few weeks later, New South Wales Planning Minister Frank Sartor announced that sonar scans conducted by the New South Wales Heritage Office at the location specified had found no trace of the lost submarine.