This paper presents a motion planning algorithm for Unmanned Surface Vehicles (USVs) to navigate safely in dynamic, cluttered environments. The proposed algorithm not only addresses Hazard Avoidance (HA) for stationary and moving hazards but also applies the International Regulations for Preventing Collisions at Sea (known as COLREGS). The COLREGS rules specify, for example, which vessel is responsible for giving way to the other and to which side of the “stand-on” vessel to maneuver. The three primary COLREGS rules were considered in this paper: crossing, overtaking, and head-on situations. For USVs to be safely deployed in environments with other traffic boats, it is imperative that the USV's navigation algorithm obey COLREGS. Note also that if other boats disregard their responsibility under COLREGS, the USV will still apply its HA algorithms to avoid a collision. The proposed approach is based on Velocity Obstacles, which generates a cone-shaped obstacle in the velocity space. Because Velocity Obstacles also specify which side of the obstacle the vehicle will pass during the avoidance maneuver, COLREGS are encoded in the velocity space very naturally. The algorithm is demonstrated via both simulation and on-water tests.