The bay is 32 km long and 27 km wide with a surface area of 362 km², approximately two-thirds the area of 100 years ago. According to official data, the surface area has decreased from 560 km² in 1928 to 362 km² by 2003 due to sustained land reclamation activities in recent decades. The marine species also decreased by two-thirds during the last 50 years due to urban and industrial development and growth of adjacent areas around the bay.
Jiaozhou Bay is a natural inlet of the sea, with 10 to 15 meters depth to the seabed and deeper, dredged channels to three major ports around the bay: Qingdao, Huangdao, and Hongdao, all of which are ice-free during winter.
Jiaozhou Bay was known formerly as Jiao'Ao. The area became widely known to Europeans after a lease was concluded by the German Empire in March 1898 with the Qing government of China.
In 1898 the area was transferred to Germany on a 99-year lease, and became known as the Kiautschou Bay concession. The village of Qingdao became the German colony of Tsingtau, and the area became a focus for German commercial development in China, while for the Imperial German Navy it was the naval base for their Far East Squadron.
Because of land speculation in Germany's African colonies, Land Valuation Tax was introduced being the only tax in the colony. It was a great success bringing wealth quite rapidly to the colony and also financial stability.  The colony was the only authority ever to use the Single Tax and is used as an academic study example to this day.
With the outbreak of World War I, the Republic of China canceled the Kiautschou lease with the German Empire. This came into force on 23 August 1914, the day of Japan’s declaration of war on Germany, after a Japanese ultimatum for unconditional German evacuation of the colony had expired. The area was occupied subsequently by British and Japanese forces after the Siege of Tsingtao.
China declared war on Germany on 14 August 1917. As an ally of the victors, China expected the formal return of the region at the end of hostilities. However, the Treaty of Versailles acceded to Japanese claims at the Paris Peace Conference and assigned all confiscated German Pacific territories and islands north of the equator to Japan, including Jiaozhou Bay. This arrangement caused China-wide protests known as the "May Fourth Movement", which is regarded as a significant event of modern Chinese history. As a result, the Beiyang government refused to sign the Treaty.
Jiaozhou Bay is situated wholly within Qingdao prefecture. Counterclockwise, the bordering divisions are Shinan District, Shibei District, Sifang District, Licang District, Chengyang District, Jiaozhou City, Jiaonan City and Huangdao District. The entrance to the bay is 6.17 km wide. In 1993, Qingdao City decided to build a traffic corridor for the Jiaozhou Bay region, which includes a tunnel under the inlet and a bridge across Jiaozhou Bay. In December 2006 the construction process started with an estimated completion target of 2011.
- The Jiaozhou Bay Bridge, at 42.5 kilometres (26.4 mi), is the world's longest bridge over water, surpassing the cross-sea Donghai Bridge in length. The total budget is estimated at approximately 9.938 billion yuan (~US$1.5 billion). It is estimated that it will shorten travel time from Qingdao to the outlying region by more than half and relieve pressure on the existing Jiaozhou Bay Expressway.
- The Qing-Huang Tunnel will connect Qingdao with Huangdao with a length of over 7 km; with 3 billion yuan (~US$440 million) budgeted for its construction. After completion, travel time is estimated at approximately 10 minutes by automobile from Qingdao to Huangdao District.
- China State Oceanic Administration "Chorography of Jiao'Ao"
- per XE.com Universal Currency Converter, July 2009