High Quality Content by WIKIPEDIA articles! Carancahua Bay is a northern extension of Matagorda Bay located in Jackson and Matagorda counties in Texas, United States. It is oriented from the southeast to the northwest but meanders as it reaches the north to the confluence with Carancahua Creek. It is generally slender, only about 1 mile (1.6 km) in width north of its circular opening. The name for the bay comes from the term that formerly referred to the Karankawa Indians, who once resided on its shores.