North of Ellendale, US 113 enters the Delaware Bay watershed; the highway crosses Cedar Creek to the west of Hudson Pond and passes to the west of the unincorporated community of Lincoln at the intersection with Fitzgeralds Road/Johnson Road. The highway continues through the city of Milford, which was founded in the early 19th century at the head of navigation of the Mispillion River whose antebellum buildings, late 19th-century buildings, and shipbuilding heritage are preserved, respectively, in the North Milford, South Milford and Milford Shipyard Area historic districts. US 113 intersects DE 36 (Shawnee Road/Lakeview Avenue) on the southwest side of town before crossing the river into Kent County between two of its impoundments, Silver Lake to the east and Haven Lake to the west. The highway has a grade crossing of the Delmarva Central Railroad's Indian River Subdivision track and intersects DE 14 (Milford Harrington Highway/Northwest Front Street). On the north side of Milford, US 113 passes the historic Walnut Farm and heads east of a park and pool lot at a local business before it intersects DE 1 Business (North Walnut Street) obliquely. DE 1 Business joins US 113 in a short concurrency that ends when both the state business loop and the U.S. Highway reach their respective northern termini at a partial interchange with DE 1. There is no direct access from northbound US 113 to southbound DE 1 or from northbound DE 1 to southbound US 113.