Sediment of Ostrich Bay, an arm of Dyes Inlet on Puget Sound, was historically contaminated with ordnance compounds from an onshore US Navy facility. An initial recommendation for a sediment cover to mitigate benthic risks was followed by studies of sediment transport and deposition to determine whether contaminated sediment from Dyes Inlet or other offsite sources in Puget Sound may contribute to Ostrich Bay impacts. A Sediment Trend Analysis (STA) identified net sediment transport pathways throughout the bay and inlet by examining changes in grain size distributions in multiple adjacent samples. Results indicated that fine-grained sedimentary material transports into and deposits throughout the Dyes Inlet system, with no erosion or transport out of Ostrich Bay. Echinoderm larvae mortality bioassay results were elevated in fine-grained sediments of both Ostrich Bay and Dyes Inlet. Ordnance compounds were undetected, and although sediment mercury concentrations were elevated at 0.48-1.4 mg/kg in both waterbodies, the relationship with toxicity was weak. Results of the studies and sedimentation modeling indicate that impacted sedimentary material deposits throughout the Dyes Inlet/Ostrich Bay system from unknown sources and will prevent natural recovery of Ostrich Bay as well as negate long-term effectiveness of active remedial measures. Stakeholders have recognized that remediation of the bay can be achieved only after the toxicity of depositing sediment decreases.