Flatdal is located about 12 kilometres (7.5 mi) to the northwest of the village of Seljord and about the same distance to the southeast of the village of Åmotsdal.

The village and valley is rather narrow with the river Flatdøla running through it into the lake Flatsjå, just north of the village of Seljord.

To gain more agricultural land, the lake Flatsjå was partly drained and kept at a lower elevation.

Due to this change, the river and farmland in this area is prone to flooding.

Many of the homes are built on the hillsides above the valley floor.