The town itself consists of many buildings, as well as a harbor and various passageways that allow access to higher levels. There are also some large dead sharks swimming around in the waters surrounding the town, such as outside the safe house and near a restaurant named "Pirate Grill." The ocean also contains smaller islands.
Crusher, a large squid-like creature feared by Blood Bath Bay's locals, is also believed to inhabit the ghostly realm of Blood Bath Bay's northwestern-most waters.
During the events of Sly 3, Dimitri Lousteau booked the Cooper Gang on his cruise ship as according to the favor he requested of Sly Cooper back in Holland. Dimitri gave the group the story about his grandfather, Reme Lousteau, and how he lost his diving gear, how it's been stolen by pirate cutthroat Black Spot Pete and needed their help in retrieving it. Upon arriving, Sly dressed up as Pete's old partner and talked to him to get information on the treasure's whereabouts. After learning of Captain LeFwee, the gang got to work on finding the treasure map.
After Bentley and Penelope's intelligent work acquiring the Dagger Island treasure map, the gang was able to steal a pirate ship and sail to the island. Sly used the treasure map to find the clues to the treasure. After he found it's location, the gang dug it up. It contained gold and the diving gear of Reme Lousteau. Shortly after, the gang was confronted by Captain LeFwee and his crew, who took Penelope hostage and forced them to sacrifice the gold as well. With Penelope held prisoner, the gang had to act fast and come up with a way to save her. In order for the gang to avoid impossible odds when they head back to town, they needed to strengthen their arsenal of cannons by having Dimitri gather some amplification collars for their cannons. They then needed to take down the Red Sail Sea Dog Clan, and finally, the gang sailed for the misty waters, home to a giant squid known as Crusher. Since the pirate fear him heavily, the gang figured he'd make an excellent ally for their heist. The gang was able to gain the squid's assistance by having the Guru get inside his mind.
The gang finally made their way back to Blood Bath Bay to outsmart the pirate captain and rescue their teammate. After knocking down LeFwee's masts, Sly jumped onto his ship to force LeFwee give up Penelope's location. After letting slip that she was in the Skull Keep, Sly made his way up to her, but was tricked into finding an explosive doll instead. Bentley then called in Crusher to scare off LeFwee and his mate. Bentley managed to free his love, but was then confronted by LeFwee. As LeFwee prepared to finish off the turtle, Penelope stepped in and drew a sword at the captain. She and the captain engaged in a duel on top of the ship. Penelope victoriously knocked the captain off the boat sending him into the waters to be lunched on by the sharks. With the captain dead and Penelope reunited with the team, she and Bentley grew more closer to each other than ever, and Sly and Murray were happy for them, as the two were made for each other.
Despite nobody asking him, Dimitri decided to join the team, as a way of returning the favor for helping him retrieve his grandad's lost diving gear. Before leaving, the gang decided to send Carmelita a postcard since she did not arrive to arrest everyone.
- LeFwee's castle rooftop can only be accessed as Murray in his Aboriginal Ball Form. To do this, the player should get to the rooftop of the safe house and launch himself high in the air using the catapult, then bounce around gaining enough height to reach the upper roof of the castle.
- Blood Bath Bay is based on the pirate strongholds of Tortuga, Port Royal and Nassau during the golden age of pirates.