Lundy Island and the surrounding seabed are geologically distinct from the closest land in North Devon and South Wales, being mainly composed of granite intruded into metamorphosed sedimentary rocks. The east coast of Lundy, where Iona II is located, has extensive areas of soft sediments, not found on the other three coasts of the island. It has been suggested that this difference in seabed structure has contributed to better preservation of archaeological remains.
The seabed around the Iona II wreck is generally flat, with a slight slope detected east of the amidships area. The seabed is coarse, firm, level mud and fine silt, studded with embedded pebbles and some shell inclusions and a veneer of silt in areas around the wreck itself. There are areas within the wreck consisting of loose fine sand, and there are some gravel patches around the boilers. The wreck lies at 22-28m depending upon the state of the tide.