More than 500 people protested coal mining and exports currently underway. Newcastle Harbour is already the world's biggest coal port.
Several hundred paddled into the harbour on a fleet of canoes provided by protest organisers. Others brought their own canoes or surfboards, or even homemade rafts.
The protest, organised by grassroots climate activist group Rising Tide, was the fourth of its kind since the inaugural people's occupation on world environment day in 2006.
The protest was supported by other organisations including Resistance, the Socialist Alliance, Climate Action Newcastle, Greenpeace and the Australian Greens.
Rising Tide spokesperson Carly Phillips outlined the aim of the rally: "We would like to see a moratorium on new coal-fired power stations, mines and infrastructure combined with a plan for a just transition to a renewable energy economy.
"If the Rudd government was serious about reducing Australia's climate impact it would immediately put a stop to the expansion of the coal industry and put in place plans to phase it out and replace it with jobs in renewable energy."
Fine weather meant the flotilla was a very pleasant way to make a radical political statement. Coal shipments were stopped for most of the day.
Activists from Newcastle were joined by people from the upper Hunter Valley, Sydney, Canberra, Brisbane and Ballina.
Tony Gleeson was one of six members of Ballina Climate Action Network who made the trip down for the occupation.
"It's great to be part of it — ordinary Australians not satisfied with the leadership we have, who are prepared to stand up and do something about it", he told Green Left Weekly.
According to Greens NSW MLC Lee Rhiannon, the rally was "a great success, and it shows peaceful direct action is critical to winning state and federal governments over to responsible action".
Kamrul Ahsan Khan, a Canberra-based activist with the Bangladesh Environment Network, said he was "happy to be part of the environment movement as a member of the community.
"It is great to see people taking action. People here I have spoken to today are concerned about [the climate impacts facing] Bangladesh", Khan said.
Sharyn Munro, a climate activist from Singleton (one of the main coal mining towns in the Hunter Valley) said: "the coal industry's excesses in the Upper Hunter are not only trashing the region, but the planet."
The flotilla was a catalyst for more local people to get involved in the movement.
Maile Ingall, 19, said "its amazing, and I love how each year it's bigger and bigger, with more of the community getting together".
Aaron McLean, 22, said "fuck this shit is good!"
When asked what should happen to the coal industry, McLean said, "I think they should all have a crisis of conscience and rethink their actions".