Having an area of 5200 hectares, Köyceğiz Lake is one of the largest coastal lakes in Turkey. It is situated between the small towns of Dalyan and Köyceğiz. It is the second largest coastal lake in the Aegean region and ıs formed in a deep depression, surrounded by mountains. To the south side of the lake, there is a fault line bordered by the Sultaniye and Rıza Çavuş sulphurous hot springs and mud baths. There is another thermal water spring in the centre of the lake which releases sulphurous waters directly ınto the lake. The presence of these thermal springs and the depth of the lake (20-60 metres) are indicators of continuing seismic activity. The lake is fed by the Namnam and Yuvarlakçay rivers and a number of mountain brooks.

The water from brooks melt water and fresh water springs, mixes with warm sulphurous water that is released from a fault and the brackish, oxygenated water that flows upriver with the rising tide. Due to the two-way flow from and towards the lake the water of the lake is brackish. (Fresh and salt) Due to the thermal water flow the lake is rich in minerals and contains a wealth of plankton to provide nutrition for freshwater fish and the sea fish that swim upriver to spawn. The lake has evolved into an ecologically important area with vast marshy forests of the endemic Turkish Sweetgum (Liquidambar Orientalis) The species primarily occurs in the province of Muğla, near Marmaris and in the Köyceğiz-Dalyan SEPA. The small wetlands around the lake are interesting because of their birdlife. The area is also rich with reptiles (tortoises, turtles, terrapins, snakes) and insects (dragonflies, damselflies). The lake flows out into the Dalyan Channel, which then passes the village of Dalyan and the ancient city of Kaunos before it reaches the labyrinth of reed beds and the Big Fish Trap that gives access to Çandır and the Delta. Through a narrow passage referred to as Boğaz (literally translating as throat) it then flows past İztuzu Beach into the Mediterranean.

At the south side of Köyceğiz Lake, there is Sultaniye Spa. Sultaniye is a natural hot spring with 39 degree temperature water that contains calcium chloride, calcium sulphate, calcium, sulphur, and radon. Supposedly the high level of radioactivity has a very rehabilitative property. Sultaniye Thermal Springs has a radioactive level of 98.3, making it the highest in Turkey and the 2nd highest in the entire world after the thermal waters in Indonesia.

Köyceğiz still has a number of elegant historical buildings dating back to the 19th and early 20th century. Most are found around the square which is situated behind the restaurants and bars lining Köyceğiz’ boulevard. The square also prides the “Lion of Kaunos”, a statue that was brought to Köyceğiz in the mid 1960s after illegal excavations at the historical site of Kaunos. The Lion is also found in the Köyceğiz municipality emblem.

On Mondays there is a large bustling market which both locals and tourists alike shop in. This can be reached either by bus or by boat across the lake from Dalyan.