Its coastal areas form part of the homeland of the Garifuna people.

Izabal is bordered to the north by Belize, to the northeast by the Gulf of Honduras, to the east by Honduras, and by the Guatemalan departments of Petén to the northwest, Alta Verapaz to the west, and Zacapa to the south.

The Spanish Colonial fort of San Felipe, now a Guatemalan national monument, overlooks the point where the lake flows into the Río Dulce.

The small town of Izabal is on the south shore of the lake; before the construction of the ports of Livingston and Puerto Barrios in the 19th century this was Guatemala's main Caribbean Sea port and was the original seat of Izabal department; nowadays, however, Izabal town is a remote village that gets little traffic.

The department of Izabal includes the ports of Puerto Barrios (the departmental seat), Santo Tomás de Castilla, Livingston and Guatemala's free trade zone Zolic.