Arugam Bay is situated on the Indian Ocean in the dry zone of Sri Lanka's southeast coast, and a historic settlement of the ancient Batticaloa Territory. The bay is located 117 kilometres south of Batticaloa, 320 kilometres due east of Colombo, and approximately 4 kilometres south of the market town of Pottuvil. The main settlement in the area, known locally as Ullae, is predominantly Muslim, however there is a significant Sri Lankan Tamil and Sinhala population to the south of the village, as well as a number of international expatriates, largely from Europe and Australia. While traditionally fishing has dominated the local economy, tourism has grown rapidly in the area in recent years. Arugam Kudah's literal Tamil translation is "Bay of Cynodon dactylon". Tourism in Arugam Bay is dominated by surf tourism, thanks to several quality breaks in the area, however tourists are also attracted by the local beaches, lagoons, historic temples and the nearby Kumana National Park.