The village is built on raised ground to the south of the River Towy, and to the east of the area's principal settlement Carmarthen.

Originally a farming community, Capel Dewi has grown into a commuter village, serving Carmarthen and the surrounding area.

[2] Capel Dewi is a village made up of several buildings, one of the oldest being the chapel.

Originally known as Capel Heol Dwr it was built in the early nineteenth century by a wealthy Wesleyan man.

In 1834 it was bought by a member of the Water Street Methodist Chapel in Carmarthen, and since then the building has been known as Capel Heol Dwr (Water Street Chapel).