Shilshole Bay is the part of Puget Sound east of a line drawn northeasterly from Seattle's West Point in the southwest to its Golden Gardens Park in the northeast. On its shores lie Discovery Park, the Lawton Wood section of the Magnolia neighborhood, the neighborhood of Ballard, and Golden Gardens Park. It is home to the Shilshole Bay Marina on Ballard's Seaview Avenue N.W. and communicates with the Lake Washington Ship Canal via the Ballard Locks.

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The name derives from the Duwamish word meaning "threading a needle", perhaps referring to the narrow opening through which Salmon Bay empties into Shilshole Bay.

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