The Merri River estuary (including Ruttledges Cutting) is located near Warrnambool and has two openings to the sea, both artificially modified. In 1859 the course of the Merri River was diverted in an attempt to prevent sedimentation in lady Bay.  The main channel of the Merri River now discharges into the Merri Marine Sanctuary at Stingray Bay east of Pickering Point and includes the south Warrnambool wetlands. The estuary extends up to the Princes Highway bridge at Dennington.

The western section of the estuary forms Saltwater Swamp and Kellys Swamp that drain into the sea at Rutledges Cutting. These wetlands are listed as wetlands of national significance in the Directory of Important Wetlands in Australia. Over 50 waterbird species have been recorded in these wetlands. They contain significant habitat for rare species such as the Orange-bellied Parrot and are breeding grounds for the Hooded Plover and other ground nesting birds.

14 native and 4 introduced fish species have been recorded from the Merri estuary. Highly valued recreational species include black bream and estuary perch. The estuary also supports a commercial eel fishery.