Blue Lagoon (Tanjung Biru) is a secluded bay at the base of Cape Rachado adjacent to Pantai Cermin, about 17km south of PD town. Hemmed in by a dense cover of lush vegetation and hilly forest, Blue Lagoon features a smaller but more dramatic beachfront, with a sweeping view of the bay that gleams between emerald green and deep blue depending on how the sun hits the sea water's surface.
Because of its proximity to Tanjung Tuan Forest Reserve, wildlife sightings are common, including migratory birds, squirrels and monkeys. Recreational water sports are popular activities here, including banana boating, kayaking and the ocassional jet ski. At low tide, the shoreline reveals numerous sandbanks, pools and crab holes for children to explore.