It lies at the confluence of the South and Main forks of the Licking River and is home to Kincaid Regional Theatre.

According to the United States Census Bureau, the city has a total area of 1.3 square miles (3.4 km2), all land.

Possibly settled as early as 1780, Falmouth was laid out by John Waller (1758–1823) and formally established by the state assembly in 1793.

On April 23, 1968 an F4 (possibly F5) tornado leveled many homes in the town, killing four people.

With the help of many supporters, KRT continues to enhance the arts in the community with children and teens theatre workshops and through involvement with local schools.

The Wool Festival is an annual event held adjacent to Kincaid Lake State Park during the first full weekend of October.

Heritage demonstrations and livestock exhibitions also highlight Pendleton County and Kentucky history.

The Kentucky Wool Festival has inspired the local community to adopt the sheep as its unofficial mascot.