Oxwich is an area of national importance for flora and fauna and was officially recognised as such in 1963 when the Nature Conservancy Council (now the CCW - Countryside Council for Wales) leased all 700 acres from the Penrice Estate making it a National Nature Reserve. The area is now managed by the CCW for the protection of its wildlife and its geological features. In all, the reserve consists of habitats as diverse as freshwater lakes, swamps, freshwater marshes, salt marshes, dunes, cliffs and woodland; and is home to over 600 species of flowering plants!

The freshwater marsh is considered rare in western Britain because of its proximity to the sea. Originally it was a salt marsh but in 1770, Thomas Mansel Talbot, the then owner of Penrice Estate, built an 8 feet high sea wall from the dunes to the north preventing the sea from encroaching the marsh. He then excavated a meandering ornamental lake running the length of the marsh and an extensive ditch system to drain away the freshwater flowing into the marsh from the numerous small streams and springs along the old cliff-line. The land was gradually converted to rough pasture, dissected by drainage channels. The farming principle worked well, improving 200 acres of grazing land for sheep and cattle. However, maintenance of the drainage system, needed to ensure the pasture land did not flood, was neglected sometime before the Second World War and as a result the grazing animals had to be removed due to the rising water levels flooding the area. This in turn allowed aquatic plants such as common reed, yellow iris, and bulrush to gain control.

Prior to the area becoming an NNR, the sand dunes were extremely badly eroded, often villagers needed to dig their way through 'sand drifts' which regularly blocked the road and a local botanist described the northern part of the dunes as "a sandy waste devoid of vegetation". This was partly due to army manoeuvres (the dunes had been used by the RAF and the American army during WWII) and general neglect. Another war-time episode in 1945, completely eradicated the area of the cockles by the wreck and consequent oil spillage of a tanker.

One of the jobs of the Countryside Council for Wales has been to maintain, contain and repair the dune system. A method used by conservancy volunteer groups and the CCW to hold the sand together, is planting marram grass. This is a deep-rooted plant which helps to stabilise and 'fix' the dunes. Another method used is the creation of footpaths for visitors to follow. It is important that visitors are made aware that walking over sand dunes and not keeping to the footpaths will significantly damage the dunes having far-reaching implications for this and the other habitats in Oxwich.

The bay itself is the second largest on the Gower Peninsula (Rhossili being the largest) and is one of the most popular during summer months, in fact, Oxwich bay receives around 250,000 visitors per annum, 8,000 of these being students studying the diverse habitats!

The woodland areas of Oxwich were, at one time, quarried for limestone and exported, using Oxwich bay as a small port. The fine cottages that once housed the local quarry men, the medieval church and Tudor castle are the dominating buildings in this small hamlet. One cottage in particular has gained fame for being the place the Founder Methodist Minister, John Wesley once stayed in 1764. He was so impressed with Oxwich that he returned again in later years and wrote of Gower as a whole in his Journal: