There are two bike trails in Morro Bay and this is one of them. It comes in two parts, anchored by the Cloisters Park. The Cloisters Trail is a little community trail. The name commemorates the Cloisters Inn that was on this site from 1925 to 1945.
You won't get much mileage here. In fact, there are very few miles of bike trail in the central coast. You have to take to the roads for distance.
The trail comes in two sections: behind the dunes and behind the power plant.
BEHIND THE DUNES...
The dunes section runs behind the dunes with two sand access trails out to beach itself at either end. The northern end is anchored by the full service trailhead (restrooms, water, parking) at the end of Azure St. (GE: 35.392620° -120.863434°).
From here you can take the sand trail out to the beach or the blacktop bike trail south to the Cloisters Community Park. The trail crosses the back Cloisters Park and then along the 54th St. Channel (bio-engineered - read the sign) to end at the back of the sands - behind the high school.
BEHIND THE HIGH SCHOOL, MOTEL, PARK, POWER PLANT, HILL...
Retrace your track to the Cloisters Park - another full service trailhead and more. Take the trail along side the tot lot, cross the parking lot, cross the access road and there is the opening to another section of the trail. This goes behind everything the first did not.
Cross behind the homes and over the 54th St. Channel and now you are behind the high school. Work your way out to Atascadero Rd., cross as the crossing and head for the Coast Highway. Turn at the side of the Morro Shores Inn and there is the trail again.
Now, in order, you ride behind the motel, behind Lila Keisler Park, behind the switching yard of the power plant, and behind the hill to end at the junction of Quintana and Main St. Notice the unfinished building project on your right side.
Head up Main St. and over the hill (bike lane). Turn right on Beach and head down to the harbor. Ride the Embarcadero towards the power plant. Across the street from the plant is the lower trail head of the Embarcadero Trail. It's about a half mile, but very scenic as it follows one side of the entrance channel out to Morro Rock and Morro Strand State Beach.
Come back and work your way across the waterfront down to Tidelands Park (GE: 35.359486 -120.851508) at the far end of the waterfront for more views. This marks the end of the channel and the mouth of the estuary. Quite a nice trip on a sunny day. You can tell the state of the tides by looking at the anchored boats. They clock around as the tides turn. The currents run strong in the channel.
Montana del Oro State Park - which also has good mountain biking.
Triking down the channel trail.