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Marine Protected Areas (MPAs) are increasingly used to protect marine mammals from anthropogenic threats despite limited studies that assess their efficacy. The small population of Burrunan dolphins (Tursiops australis) that inhabit Port Phillip Bay (PPB), Australia, are genetically isolated, listed as threatened and are exposed to dolphin-swim tourism. This study aimed to identify areas within PPB where dolphins are most likely to rest, forage and socialise, and whether these behaviours occur frequently within Ticonderoga Bay Sanctuary Zone (TBSZ), the only protected area designated for dolphins within PPB. Here, a comprehensive activity budget for Burrunan dolphins was established and critical habitat identified. Behavioural data were collected from 51 independent dolphin groups during 67 boat-based surveys conducted in southern PPB between December 2009 and May 2013. Travel (63.9%) and rest (1.8%) were the most and least frequently observed behaviours, respectively. Forage (16.4%), mill (10.8%) and social (7.2%) accounted for the remainder of the activity budget. Results indicate that the broader PPB region is important for foraging, socialising and nursing dolphins, while TBSZ has proven importance for foraging dolphins. Thus, the implementation of TBSZ was a correct management decision and MPAs developed without baseline data can be effective for marine mammal conservation. Three candidate MPAs were objectively identified in areas that are hotspots for foraging and socialising Burrunan dolphins in southern PPB. The findings of this study will be used to inform current conservation management strategies. If implemented, the aim of the proposed MPAs will be to reduce impacts from anthropogenic disturbance, namely dolphin-swim tour vessels.