Illawarra Highway commences at the interchange with Hume Highway at Hoddles Cross Roads west of Sutton Forest and heads in a northeasterly direction as a two-lane, single-carriageway road until it reaches Moss Vale, after which it heads in an easterly direction through Robertson until it reaches the Macquarie Pass, where the road twists through hairpin curves as it descends the Illawarra escarpment through Macquarie Pass National Park and crosses the Macquarie Valley to the coastal region around Shellharbour.

After passing through Tongarra, the highway eventually terminates at the interchange with Princes Motorway in Albion Park.

Both Robertson and Moss Vale are country towns with 19th-century buildings still intact, and Macquarie Pass has one of the southernmost stands of Australia's sub tropical rainforest.

262 was declared from Moss Vale via Robertson and Macquarie Pass to the intersection with Princes Highway at Albion Park,[2] on the same day, 8 August 1928.

[3] This was replaced with the declaration of State Highway 25 along the same route on 4 July 1962, subsuming Trunk Road 88.