The Tarago River has its headwaters in the Tarago State Forest and flows into the Tarago Reservoir at Neerim, which sits in the upper reaches of the Tarago River and harvests inflow from all upstream tributaries. Downstream of the reservoir, the river flows close to the town of Rokeby before meeting the Bunyip River (of which it is a major tributary) at Longwarry North. From there, the Bunyip River flows through a straightened channel, Bunyip Main Drain, to flow into Western Port Bay. This downstream reach supplies many irrigators in the catchment.
Water available under the Tarago environmental entitlement is stored in and released from Tarago Reservoir. Reach 2 from below the reservoir to the confluence of the Tarago and Bunyip rivers is the target reach, as it has high ecological value with a high diversity of native fish and patches of native fringing vegetation. Environmental water deliveries to reach 2 often achieve the desired flows in reach 6.