Just east of the neighborhood of Gravesend is Sheepshead Bay, which separates the mainland of Brooklyn from the eastern part of Coney Island. The mouth of the bay is about a mile southwest of Marine Park. Sheepshead Bay was named for the sheepshead, which is an edible fish that used to thrive in the waters of the bay.

Originally the bay was the eastern entrance to Coney Island Creek, but over the years access to the creek has been eliminated by the construction of Shore Parkway and the filling in of the central part of the waterway. Today the area is home to recreational fishing fleets, and a Holocaust memorial park is located at the western end of the bay.

From 1980 to 2000, Sheepshead Bay experienced a real estate boom and became home to the much-loved Lundy Brothers seafood restaurant until the establishment closed its doors in 2007. The area is also home to a number of restaurants and nightclubs that have a distinct Soviet flair, and the waterfront district now features a number of condominium developments. On Emmons Avenue, visitors will find piers, seafood markets and tour boats.

About 120,000 people call Sheepshead Bay home. The neighborhood is served by the BMT Brighton Line, and the major shopping and business areas are Emmons Avenue, Sheepshead Bay Road, Ocean Avenue, and Nostrand Avenue. Emmons Avenue is a waterfront road whose piers are bustling with activity, from yachts and boats offering day trips for fishing, seafood markets and more.

Schools in the community include Sheepshead Bay High School, JHS 14 Shell Bank Intermediate School, The Bay Academy, P.S. 254 and P.S. 52. Area private schools include St. Mark's School and St. Edmund's, and Kingsborough Community College, which part of the City University of New York (CUNY), is also nearby.