Klosterman Bayou abuts 6 other watersheds. Lake Tarpon to the east, Sutherland Bayou and Smith Bayou towards the south, Anclote River and St. Joseph Sound to the north and Clearwater Harbor to the west. All boundary conditions from the abutting watersheds were considered during the development of the WMP. Anclote River and Smith Bayou have been evaluated and modeled and a Watershed Management Plan for Lake Tarpon is currently in progress.

Klosterman Bayou is a lagoonal embayment and has headlands both to the north (Klosterman Point) and south (Danenman Point) of it. The western end of Klosterman Bayou connects to the St. Joseph Sound which is within the Pinellas County Aquatic Preserve. Approximately one-third of the Klosterman Bayou watershed is tidally influenced (estuarine/marine), and approximately two-thirds of it are uplands (freshwater).

The watershed includes a combination of commercial, industrial, open land, golf courses/recreational, residential, transportation, upland forest, water, and wetland land uses. There are 2 major tributaries in the watershed - Channel A and Channel B. Channel A is the main tributary draining Innisbrook Golf Course, which occupies a substantial amount of the watershed. The primary drainage pattern for the Klosterman Bayou watershed generally occurs from southeast to northwest – stormwater runoff crosses north from south of Bee Pond Road into the lake system/central canal within the Innisbrook Golf Resort and across Alternate U-19 into the tidally influenced man-made finger canals which route to Klosterman Bayou. The Innisbrook Golf Resort has a backflow prevention system on its west side to prevent migration of brackish water into its interconnected lake system.