<p>Groundwater is often the only source of freshwater for maritime small-island or coastal communities, including those which are vulnerable to seawater intrusion, coastal erosion, and rising sea levels driven by climate change. As a preventative measure in such environments, observation wells are usually installed to monitor aquifer conditions. This study uses numerical simulations to investigate the impact of a deep, long-screen observation well installed near a pumping well within the Magdalen Islands’ sandstone aquifer (Québec, Canada), threatened by saltwater intrusion. The simulations include 3D density-dependent groundwater flow and advective–dispersive solute transport under varying withdrawal rates and distances between the pumping and observation wells. Results revealed that an observation well perturbs the local distribution of total dissolved solids (TDS) and the position of the freshwater–saltwater interface, and increases the mixing of fresh and saline water. A conically shaped zone of brackish water forms above the original interface around the observation well, thereby increasing salinity in and around the nearby pumping well. Placing the observation well 15 m downgradient of the pumping well, pumping at 25, 50, and 75 m³/day, increased the average TDS in the pumping well from 0.12, 30, and 370 mg/L to 126, 786, and 2065 mg/L, respectively. When placed 45 m downgradient, corresponding concentrations reached 1, 324, and 1399 mg/L. Upgradient, and laterally offset placements of the observation well yielded similar increases. The findings demonstrate that higher pumping rates and shorter well separation distances intensify salinity, underscoring the importance of careful design and placement of observation wells in coastal aquifers.</p>