The Island Bay is a geographical feature located between the Snow Peninsula and the Main Biome. It is often confused with the Ocean Cove. The ferry's path actually involves the Island Bay, as the ferry performs a two-point-turn in the bay. This is not any known use for this area aside from being a part of the ferry's path. However, commonly during the Halloween Update, Spook Wood and Sinister Wood were found growing here on the rocks.

The Island Bay has a connection with the Tropics Bay since the rocks are structured to connect with each other and they have a similar appearance. This geographical feature has the default Lumber Tycoon 2 rock color that is seen in every region except the Tropics Biome and the Volcano.