The Canyon is a simple but attractive site at the Tollgate Islands, right beside Dragon Rock. The Marine Life Network describes two rock formations about 3 m apart that create canyon walls, at 10–15 m, with sponges, nudibranchs, slipper lobsters, anemones and schooling fish. Spirit Divers' site guide rated it Easy with a maximum depth of 14 m, suitable for Open Water and Advanced divers, day or night, and noted large canyons that are easy to navigate whether you head north or south.

The walls of the canyon are covered in sponges, sea squirts and anemones, and the shaded crevices hold slipper lobsters (Balmain bugs), nudibranchs and small crabs. Schools of yellowtail, sweep and bream move through the channel, and blue groper and red morwong patrol the walls. The site's big attraction is its position next to Dragon Rock. Spirit Divers noted that grey nurse sharks are frequently seen passing through, especially during the summer–autumn season when the colony is at its largest.

This is a good dive for Open Water divers, a comfortable second dive after watching the sharks at Dragon Rock, and a straightforward night dive. The walls make navigation easy and the depth is modest. As with all Tollgate sites, it lies within a sanctuary zone and grey nurse shark critical habitat, so no fishing or collecting is allowed and divers must follow the grey nurse code of conduct. No published GPS was found, so the position is given only by reference to Dragon Rock. Operators may use slightly different names for the same area.

Boat access only. Beneath the Bay leaves from the Hanging Rock ramp in Batemans Bay and runs out to the Tollgate Islands in the middle of the bay, about 10–15 minutes; private boats also use the ramps at Batehaven, Wimbie Beach and Mosquito Bay (Lilli Pilli). Landing on the islands (a nature reserve) is not permitted.

The Canyon is next to Dragon Rock (Shark Gutter), so operators often combine the two or use it as the second dive of a grey nurse trip.

The Tollgate Islands sit in the middle of Batemans Bay and break the wind and swell, so some side of the group is usually diveable. The Canyon shares Dragon Rock's conditions: fine in light to moderate seas, but large swell surges between the walls. Summer afternoon north-easterlies make the anchorage choppy, so mornings are best.

Visibility falls after heavy rain as the Clyde River floods the bay.

Descend near the canyon and swim its length north or south, following the walls. At the far end, turn and return on the outside of one wall. Stay low and still if grey nurse sharks come through from Dragon Rock.

Spirit Divers ran The Canyon as an Easy site (14 m, day or night); the Marine Life Network lists 'Canyons' at 10–15 m. Beneath the Bay rotates its Tollgate dives and visits this area on grey nurse trips.