Macquarie Rivulet has a catchment area of approximately 110km², from the Illawarra escarpment in the west to Lake Illawarra in the east. The majority of the catchment is contained within the Shellharbour Local Government Area (LGA). Land use within the catchment includes escarpment, bushland, rural, new and old low/medium density residential areas, industrial development, special use and regionally significant areas including the Illawarra Regional Airport.

The highest point in the catchment is Mount Murray at around 760 m AHD. The terrain then drops into an escarpment with very steep upper slopes. These slopes broaden out to a large and relatively flat floodplain which flows into Lake Illawarra via a major delta in the east.

The catchment can generally be divided into three major streams including:

• Macquarie Rivulet (the major stream draining the catchment)
• Marshall Mount Creek (a secondary arm draining the northern portion of the catchment, known as Calderwood valley)
• Frazers Creek (a secondary arm draining the southern portion of the catchment)

The catchment includes the suburbs of Albion Park, Calderwood, Tullimbah, Albion Park Rail, Yellow Rock Ridge, Croome, North Macquarie and Yallah.