Krásné Údolí consists of two municipal parts (in brackets population according to the 2021 census):[2] The name literally means 'beautiful valley' in both Czech and German and refers to its location.

[3] Krásné Údolí is located about 18 kilometres (11 mi) south of Karlovy Vary.

The southeastern part of the municipal territory with the town proper lies in the Teplá Highlands.

Soon Toužim became the economic centre of the estate and the development of Krásné Údolí stopped.

[6] The I/20 road (part of the European route E49) from Plzeň to Karlovy Vary passes through Krásné Údolí.