Abstract The efficacy of protected areas for wildlife management is largely dependent on appropriate design. It is therefore crucial that the distribution of target species is well understood. The Banks Peninsula Marine Mammal Sanctuary (BPMMS) was designed to protect Hector's dolphins from bycatch in gillnets. However, the Banks Peninsula dolphin population is likely to be still declining, partly due to continued bycatch outside the boundaries of the BPMMS. A three year series of aerial line‐transect surveys around Banks Peninsula was carried out to investigate seasonal changes in distribution of Hector's dolphins out to 20 nautical miles (37 km) from the coast. Dolphin sightings were concentrated close to shore in shallow water in summer, but were more evenly distributed throughout the study area in winter. A greater proportion of dolphins were sighted outside the 4 nautical miles (7.4 km) offshore boundary of the BPMMS in winter (mean=56%) than in summer (mean=19%) (G=88.25, df=1, P<0.001). Partial Mantel tests revealed the effects of distance offshore and depth on dolphin occurrence while controlling for spatial autocorrelation and multicollinearity within the data. Distance offshore had the strongest and most consistent effect on dolphin presence, while depth had a strong effect in summer only. It is proposed that restrictions on gillnetting around Banks Peninsula must be extended in order to reduce bycatch of Hector's dolphins to a sustainable level, and that a new offshore boundary of the BPMMS would be best defined by distance from the coast. Copyright © 2009 John Wiley & Sons, Ltd.