High Quality Content by WIKIPEDIA articles! Matagorda Bay is a large estuary bay on the Texas coast, lying in Calhoun and Matagorda counties and located approximately 80 miles (130 km) northeast of Corpus Christi, 143 miles (230 km) southeast of San Antonio, 108 miles (174 km) southwest of Houston, and 167 miles (269 km) southeast of Austin. It is separated from the Gulf of Mexico by Matagorda Peninsula and serves as the mouth of numerous streams, most notably the Lavaca and Colorado Rivers. The major Texas seaport of Port Lavaca is located on the system`s northwestern extension of Lavaca Bay. The city of Palacios is found on northeastern extension of Tres Palacios Bay, and Port O`Connor is located on the southwestern tip of the main bay`s shore. The ghost town of Indianola, which was a major port before it was destroyed by two hurricanes in the late 19th Century, is also found on the bay.