The city is located in the Blue Mountains, on the Great Dividing Range at the far western fringe of the Greater Sydney area.

The mayor of Blue Mountains City Council is Councillor Mark Greenhill, a member of the Labor Party.

The urban part of the city consists of a ribbon of close or contiguous towns which lie on the Main Western railway line, served by NSW TrainLink's Blue Mountains Line, and Great Western Highway between Emu Plains and Lithgow.

About 70% of the city's area is within the Blue Mountains National Park which lies north and south of the ribbon of towns.

The road to Sydney, the Great Western Highway, is mostly dual carriageway but is relatively slow due to the urban development and hilly terrain.