Lily Bay Township lies immediately north of Lily Bay State Park and Campground in Beaver Cove, along Moosehead Lake’s Lily Bay.
Lily Bay Road is the township’s principal improved route. It initially follows the lakeshore, then turns inland and continues northwest toward Kokadjo Village and First Roach Pond. Both destinations are in Frenchtown Township.
The northern portion of the township contains a network of logging roads. The terrain has few prominent mountains; Hardwood Hill, in the northwest, reaches 1,576 feet and is the township’s highest elevation.
The small village of Lily Bay occupies the shore of Moosehead Lake and the bay from which it takes its name. A limited number of houses stand along Lily Bay Road, reflecting the settlement’s modest scale and its close relationship with the water and surrounding forest.
At the village, Lily Bay Road leaves the shore and turns northeast through the township. Its wooded course leads toward Frenchtown Township, Kokadjo, and First Roach Pond. Forest management areas and former clearcuts along the route reveal another side of this predominantly wooded landscape.