The Bay of Balar was a large ocean inlet of Belegaer south of Beleriand, fed by the river Sirion. In the outer reaches of the bay was the Isle of Balar.
During the Battle of the Powers, after the Awakening of the Elves, the shape of Middle-earth was altered and the chief of the lesser bays between the Great Gulf and Helcaraxë was the Bay of Balar.
When the hosts of the Vanyar and the Noldor, led by Oromë, reached the great ocean, Ulmo caused an island that had stood alone in the middle of the sea to move into the Bay of Balar. The Elves embarked upon the island, which was drawn across the waters to the shores of Aman. However, the eastern horn of the island separated from the main part and remained in the bay as the Isle of Balar.
The name refers to the Valar (and Maiar), especially Ossë, who was associated with continental shelf areas. In Telerin the name Valar was Balai, and in Sindarin the form it took was eventually Bala.