The colourful images are part of Float Your Boat parade, which is an open competition for boat owners to dress their vessels with lights and enter the a flotilla for cash prizes.

The event brings thousands of visitors to Lake Macquarie every year, with the event this year expected to attract more than 20,000 people over two nights.

"Our lake is a giant stage that attracts amazing events to our region on the water and soon to be in the air with the Word Air Race here in November," Lake Macquarie council manager of arts, culture and tourism Jacqui Hemsley said.

More than 20 boats decked out with thousands of lights departed from Marmong Point Marina at 6pm Friday and will do the same on Saturday.

While the vessels tracked a course to Wangi Wangi on the first night, their destination is Belmont 16s Saturday.

A boat disguised as a high-performance aerobatic plane decked out with thousands of lights leads the flotilla, representing the World Air Race to be held at Lake Macquarie in November.

A water taxi has also been transformed into an illuminated road taxi in a first for the annual event.

Lake Macquarie mayor Kay Fraser said this year is set to be one of the best the community has ever seen.

"The weather is looking exceptional with two sunny days forecast for Friday and Saturday, so I am encouraging families and friends to come out and enjoy all Float Your Boat has to offer," Cr Fraser said.

Saturday's parade is expected to pass Warners Bay at 6:30pm to 7:30pm, Valentine at 8pm, and finish at Belmont at 9pm.

The two-day event will also includes a range of shore-based activities with live music, food and entertainment from 5pm on Friday at Royal Motor Yacht Club Toronto.

Saturday's on shore-activities will be held from 5pm at Warners Bay Foreshore.

Participating boats will go in the running to win a $2000 People's Choice Award, a $1000 Mayor's Best Boat Award for vessels over five metres, and a $1000 Mayor's Best Boat Award for vessels over 10 metres.

Viewers can vote for their favourite online at lakemac.com.au/fybvote from 6pm Saturday.

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