Horseshoe Bay lies on the north side of Magnetic Island and as the largest bay on Magnetic Island, is popular for all variety of watersports, including boats available for hire. Charter and tour boats journey from the eastern end of the bay to the outer Great Barrier Reef and tour operators can sign you up on the spot for kayaking, parasailing, and even swimming on horseback. There is a safe swimming enclosure at Horseshoe Bay, a child playground, and ample picnic facilities. Many holiday houses and apartments may be rented in Horseshoe Bay.

The Horseshoe Bay Beachfront Esplanade has a pleasant view over the yachting harbour, and boasts a large selection of restaurants, cafes, and bars with live entertainment.