It is located on the banks of Cauvery River, 3 kilometres (1.9 mi) to the north-east of Erode Central Bus Terminus and 1 kilometre (0.62 mi) west of Pallipalayam.

The economy of this urban area is primarily textile production using power looms.

Karungalpalayam is one of the famous tourist locations, in the city of Erode, on Erode-Salem National Highways.

Also, the Waterways Ferry Services are available here, for transporting through Cauvery River to the other banks on Namakkal District.

Chinnamariamman Temple[2][3][4] and Subramaniasamy Temple[5] located in Karungalpalayam are under the control of Hindu Religious and Charitable Endowments Department, Government of Tamil Nadu.