Conservation of colonial waterbird breeding populations often includes restoring historic nesting habitat or establishing new nesting habitat in protected areas. However, colonization of new or restored nesting habitat may be hindered by the lack of social cues from nesting conspecifics to attract prospecting birds. Social attraction, whereby decoys and colony sound recordings are used to mimic active nesting colonies, has been used successfully to establish waterbird nesting colonies throughout the world. We constructed islands, modified the substrate so that it was attractive to nesting Caspian terns (Hydroprogne caspia), and then used social attraction to establish nesting colonies within two managed ponds in San Francisco Bay, California where Caspian terns had not previously nested. During the 2015–2017 breeding seasons, we deployed decoys of adult Caspian terns, broadcasted colony sound recordings, and monitored Caspian tern response. Caspian terns formed nesting colonies within weeks of social attraction deployment at each of the two ponds in 2015, and the size of these colonies increased in each subsequent year of the study. In 2017, the final year of the study, we estimated a minimum of 501 breeding pairs between the two colonies, making them two of the three largest Caspian tern colonies in the San Francisco Bay estuary. In total, these two colonies produced 1343 nests and 531 fledglings over the three-year study period. Nest densities were low (mean: 0.29 nests/m2 of active colony area) compared to other studies, and greater than 80% of the modified island habitat remained unused by nesting Caspian terns in 2017, suggesting that there is additional space for future colony growth. The successful establishment of two of the largest Caspian tern nesting colonies in the San Francisco Bay estuary in just three years demonstrates the potential of using island construction and habitat modifications, combined with social attraction measures to establish waterbird nesting colonies.