Horseshoe Bay is a city in Burnet and Llano Counties in the U.S. state of Texas. Prior to its incorporation in September 2005, it was a census-designated place (CDP). The CDP population was 3,337 at the 2000 census. Horseshoe Bay is located in both Burnet County and Llano County on the southern shore of Lake Lyndon B. Johnson. This is about 23 miles southeast of Llano and 42 miles northwest of Austin. According to the United States Census Bureau, the CDP had a total area of 26.7square miles (69.1Square kilometers), of which, 23.4square miles (60.5Square kilometers) of it is land and 3.3square miles (8.6Square kilometers) of it (12.48%) is water.