Located south of the city of Wollongong, north of the city of Shellharbour, and northeast of Dapto, Lake Illawarra receives runoff from the Illawarra escarpment through Macquarie Rivulet and Mullet Creek, drawing from a catchment area of . With an average depth of , the relatively shallow lake, brought about because of infilling by sand which has been eroded from the surrounding catchments, covers a surface area of . At an elevation of , the maximum volume of water held in the lake is .