The reserve contains near pristine habitats and is renowned as a world class diving destination due to its clear waters, spectacular sea cliffs and unique and diverse marine life. The area is highly productive with a diversity of habitats; encapsulating a wide range of reef types, sheltered sand habitats and seagrass beds.
Rocky reef habitats in the reserve support a diversity and abundance of species, including banded morwong (Cheilodactylus spectabilis), long snouted boarfish (Pentaceropsis recurvirostris), bastard trumpeter (Latridopsis forester), real bastard trumpeter (Mendosoma lineatum), butterfly perch (Caesioperca lepidoptera), striped trumpeter (Latris lineate), weedy sea dragon (Phyllopteryx taeniolatus), and a small population of the threatened live-bearing sea star (Patiriella vivipara).
These habitats also support some of the most persistent and important forests of iconic giant string kelp (Macrocystis pyrifera) in the Bruny bioregion. There are also beds of bull kelp (Durvillaea potatorum), interesting red algal species and populations of southern rock lobster (Jasus edwardsii) and blacklip abalone (Halitosis rubra).
The spectacular sea caves in Waterfall Bay support complex invertebrate assemblages dominated by colourful sponge gardens, soft corals, bryozoans, ascidians, zoanthids and anemones. The area contains important habitat for three species of threatened handfish, including the Waterfall Bay sandfish (Sympterichthys sp), Zeibells handfish (Sympterichthys sp.) and the red handfish (Brachionichthys polities).
The reserve area provides habitat and feeding grounds for various seabirds, including the little penguin (Eudyptula minor) and provides an important scientific reference area for the monitoring of exploited species, seaweed biodiversity, sessile invertebrate biodiversity, cavern fauna and handfish biology.
The area was proclaimed a conservation area under the Nature Conservation Act 2002 on 9 December 2009. This reserve class provides for the protection and maintenance of the natural and cultural values of the area and the sustainable use of natural resources.
Fishing is permitted in the reserve. Rules and regulations relating to recreational fishing in Tasmania can be found in the Recreational Sea Fishing Guide.