Mulroy Bay is located between the Fanad and Rosguill peninsulas along the Wild Atlantic Way in north Donegal. It is approximately 12 km long along a north-south axis. The entrance to the bay is quite narrow leading to a winding entrance channel 10 km in length. This channel varies in width and depth, with three significant narrows only 100–150 m across. It opens into the Broad Water, an open shallow sea lough 8 km from north to south and 2.5 km from east to west.
Towns along the bay include Milford, Kerrykeel and Cranford.
The English name of the bay comes from Cuan na Mhaoil Ruaidh, the original Irish language name for the bay which means ‘Bay of the Red Current’