An exhaust system is provided for an engine of the type used to power a watercraft. The engine has at least one combustion chamber with an exhaust passage leading therefrom. A crankshaft of the engine rotates about an axis passing through the engine. The exhaust system includes an exhaust manifold connected to the engine and having a passage leading therethrough from the exhaust passage leading from the combustion chamber. The exhaust manifold is connected to an exhaust pipe leading to an exhaust discharge. The connection of the exhaust manifold and exhaust pipe is generally aligned with the crankshaft axis, but positioned vertically thereabove.