Outer Flagstaff lies below the point on the inner face of North Head where a signal flagstaff once stood to relay news of arriving ships to the town, between the Quarantine Station beaches and the sponge gardens under Old Man's Hat. It is the shallowest of the North Head boat dives, 7–20 m according to Sydney Dive Charters, and combines three things: boulder-and-kelp reef with the beginnings of the sponge growth that intensifies eastward (Pro Dive's 'Flagstaff' is noted for its sponge formations), 'wreck pieces' – scattered iron and timber fragments from the many vessels wrecked or broken up around the Quarantine Station and the Heads, which cannot be assigned to a single ship – and, in late summer and autumn, the juvenile tropical fish that the East Australian Current delivers into the harbour each year. Those tropical vagrants make it a favourite with fish-watchers from February to May: butterflyfish, sergeant majors, damselfish, moon wrasse and juvenile surgeonfish among the kelp, all doomed when the water cools but colourful while they last.

The permanent residents are the reserve's usual cast of blue groper, leatherjackets, old wives, yellowtail, sea dragons on the sand, wobbegongs and PJ sharks under the rocks, cuttlefish and octopus in the cracks. Being shallow and inside the harbour, Outer Flagstaff is used for Open Water course ocean dives, Advanced navigation dives and easy second dives, and it is a good night dive. It is sheltered from the north-easter and only troubled by big southerly swell.

It suits beginners and fish-watchers; it is inside the North Harbour Aquatic Reserve, and the wreck fragments, like everything else, must be left where they lie.

Boat only. Dive Centre Manly loads at Manly Cove beach beside the wharf; Pro Dive Manly and Sydney Dive Charters load at the Little Manly boat ramp (end of Stuart Street, Manly – free parking, set-up benches, toilets at the reserve); Sydney Dive Charters also picks up at Rose Bay public wharf. From Manly the run is 10–15 minutes across North Harbour to the inside of North Head, 20–25 minutes from Rose Bay.

Private boats launch at Little Manly, Roseville Bridge (Middle Harbour, 30 minutes) or Rose Bay. Boats anchor on the reef in 15–20 m or run in toward the cliff and drop the anchor when the bottom appears; there are no moorings, and many abandoned anchors litter the reef.

The inner face of North Head is the most sheltered ocean-quality diving in Sydney. It faces west-south-west into the harbour, so it is protected from the north-east sea breeze and from northerly and easterly swell, and is at its best when a strong north-easter is blowing and every ocean site is rough. It is exposed to southerly swell rolling through the Heads: a big southerly (over 2 m) sends surge along the cliff and dirties the water, though the deeper sponge gardens are usually still diveable.

Tidal current runs along the wall, east on the flood and west on the ebb, strong enough to plan a drift; slack water is easiest for novices. Visibility is 10–15 m on average, 25 m on winter westerlies, and drops after heavy rain when the harbour flushes brown. Ferry, shipping and small-boat traffic through the Heads is constant – ascend on the anchor line or a DSMB close to the cliff.

Descend to 12 m and follow the reef edge out to 18–20 m to find the wreck pieces, then return through the shallower boulders and kelp at 7–10 m, where the juvenile tropical fish shelter in late summer. Extended safety stop over the shallow reef by the anchor.

Sydney Dive Charters (Outer Flagstaff, 7–20 m) and Pro Dive Manly (Flagstaff, within its 'North Head Peninsula' set) use it as a shallow second dive and training site; Dive Centre Manly dives the same ground.