Southern Discoveries opened a retail store in Queenstown last year and decided this year it would enter the Festival Street Parade.
Its entry is a homage to the Milford Sound Underwater Observatory.
Marketing co-ordinator Anita Golden said staff had been working for about three weeks, getting in touch with their inner child, using papier-mache to make a variety of sea creatures, including penguins, a dolphin, fish, a seal, sea anemones, paua shells and starfish.
They will feature on the float, along with a walking penguin and a king crab. The crab was not an undersea creature that would be seen at Milford, "but it was that or a mermaid".
Ms Golden said the underwater observatory structure had been at Milford Sound for 14 years and had recently undergone a refurbishment.
Now, visitors could see videos on avalanches, the making of the Homer Tunnel, the Milford Track, and information about the Maori and the European Settlers.
Downstairs, visitors could get a first-hand look at Milford Sound underwater creatures through the observatory.
Ms Golden said "kids go free" during the school holidays, and hoped children would be inspired to visit Milford Sound and see the creatures in real life.
The festival street parade will begin at noon today, travelling through the CBD.
To allow for the parade, several streets will be closed to traffic.
Closed from 9am until 2pm will be: Camp St from Shotover St to Earl St; Beach St from Camp St to Shotover St; Athol St; Cow Lane; Rees St; Marine Parade; Church St; Earl St; and Searle Lane.
Beach St from Rees St to Shotover St will remain closed until 3pm to allow for the completion of the Family Fun Day at Earnslaw Park.
From 11am to 2pm Shotover St from Stanley St to Beach St will also be closed, along with Camp St (extended closure from Man St to Earl St); Duke St; Lower Brecon St; and Ballarat St from Stanley St to Camp St.
