The Bagaduce River flows through Penobscot and empties into Penobscot Bay at Castine Harbor, about 25 miles northeast of Rockland. Traffic on the river consists of recreational craft, fishing boats, and training vessels of the Maine Maritime Academy in Castine.

Work on the Bagaduce River, completed in 1902, involved the construction of an 0.8-mile-long channel, 40 feet wide, extending from Bridges Point in Northern Bay, past Winslows Island, to Bowdens Wharf at Penobscot. The channel is six feet deep, except at Winslows Island, where it is four feet deep. The Corps also removed a small quantity of rock in South Bay at Johnsons Narrows, opposite Brooksville.