Known as the birthplace of Australia, Botany Bay borders the site, at Kurnell, at which British explorer James Cook first stepped ashore on the east coast of Australia in 1770. It was originally named Stingray Harbour, because of the abundance of the fish, but Cook later changed the name to Botany Bay in recognition of the unique plant collection made in the vicinity by Joseph Banks.

In 1788, the First Fleet came to the bay to establish a penal colony, but Governor Phillip decided it was unsuitable: the waters of the bay were so shallow that his sailing vessels had to anchor opposite the entrance and so were exposed to easterly winds; moreover, the water supply was inadequate, the soils were sandy and some of the foreshores were swampy, which Phillip considered would be unhealthy. He therefore transferred the site of settlement to Port Jackson, some 9km North.

It is now an industrial suburb about 9km South of Sydney and has been developed into a major harbour.

To the north of the Bay is the industrial suburb of Botany, supporting such industries as engineering, wool-scouring, tanning and the manufacture of resins and fibreglass. At Kurnell on the south-eastern shore there is an oil refinery

The Sydney (Kingsford Smith) Airport, serving both domestic and international aircraft, is located on the NW shore of the bay. The largest runway at Sydney airport has been built on land reclaimed from the sea and projects into the bay.

Headlands on either side of the entrance to the Bay have been declared historic reserves.