Located in a heavily wooded area, with birch, cottonwood, alders, willow, and white spruce trees, Pedro Bay has one of the most attractive settings in southwestern Alaska. It is believed that they came from the Cook Inlet area to trap, hunt, and fish. In 1935, the residents of old Iliamna moved out and some residents settled at the present location of Pedro Bay. Economy Pedro Bay has limited employment opportunities. Commercial salmon fishing and tourism provide much of the economic base for the village.
Some residents travel to various fishing districts of Bristol Bay to participate in the fishery.
Several wilderness lodges operate in Pedro Bay. A 3,000 foot state owned gravel airstrip provides air accessibility, but has no crosswind runway. Regular mail, passenger, charter, and cargo services are provided by Six Mile Air, Lake Clark Air Service, Birchwood Air Service, and Iliamna Air Taxi. Barge service is available from Bristol Bay via the Kvichak River. Residents also receive barged goods at Pile Bay, located ten miles east of the village.