This study investigated the relationships between behavioural responses of Atlantic salmon Salmo salarsmolts to saltwater (SW) exposure and physiological characteristics of smolts in laboratory experiments. It concurrently described the behaviour of acoustically tagged smolts with respect to SW and tidal cycles during estuary migration. Salmo salar smolts increased their use of SW relative to fresh water (FW) from April to June in laboratory experiments. Mean preference for SW never exceeded 50% of time in any group. Preference for SW increased throughout the course of smolt development. Maximum continuous time spent in SW was positively related to gill Na+, K+-ATPase (NKA) activity and osmoregulatory performance in full-strength SW (measured as change in gill NKA activity and plasma osmolality). Smolts decreased depth upon reaching areas of the Penobscot Estuary where SW was present, and all fish became more surface oriented during passage from head of tide to the ocean. Acoustically tagged, migrating smolts with low gill NKA activity moved faster in FW reaches of the estuary than those with higher gill NKA activity. There was no difference in movement rate through SW reaches of the estuary based on gill NKA activity. Migrating fish moved with tidal flow during the passage of the lower estuary based on the observed patterns in both vertical and horizontal movements. The results indicate that smolts select low-salinity water during estuary migration and use tidal currents to minimize energetic investment in seaward migration. Seasonal changes in osmoregulatory ability highlight the importance of the timing of stocking and estuary arrival.