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Lady Musgrave Island is a haven for diverse wildlife. Its Pisonia forests and She-Oak and Pandanus trees host numerous bird species, including White Capped Noddy Terns, Bridled Terns, and migratory shorebirds like Ruddy Turnstone. The island is a key breeding ground for Black Noddy Terns and Wedge-tailed Shearwaters.

The surrounding waters are home to small white tip reef sharks, leopard sharks, and vibrant coral reefs, ideal for snorkelling. Additionally, the island is a crucial nesting site for Green and Loggerhead turtles, making it a must-visit for wildlife enthusiasts.