It is overall the southernmost town of Schleswig-Holstein and belongs to the district (German: Kreis) of Herzogtum Lauenburg.

It took its name from that of the castle of Lowenborch (erected here between 1181 and 1182), deriving from Lave, the Polabian-language name of the Elbe (compare modern Czech Labe).

In medieval times Lauenburg was a waypoint on the Old Salt Route, while today it is the southern terminus of the Elbe-Lübeck Canal.

Narrow streets up the hill lead to the "upper town" where Lauenburg Castle is located.

To the south of the city lies the Elbe and Lower-Saxony, which used to belong to the duchy until it was ceded to the then neighbouring Kingdom of Hanover in 1814.