Arcatao is located 32 km east from Chalatenango at the border with the Republic of Honduras in a small valley between the mountains; La Cañada and Caracol.

With its temperate climate most of the year and the heavy rainfall during the winter season, the soil is rich in nutrients allowing the growth of many crops like; white corn, a variety of colored beans, rice, sugar cane, tomatoes, watermelons, squash, chayotes, cucumbers.

Other industries are the manufacturing of iron implements, like; knives, machetes, shovels, etc., and manual artistic souvenirs.

[citation needed] One of the roads is semi-paved and goes north-west bound, linking with other villages like Nueva Trinidad, San Jose Las Flores and Los Ranchos.

Tianguis or swap-meets are taking place at the central plaza where typical food is served in every corner.