The municipality is located in the central and northwestern region of Montenegro.
It was also the largest municipality by land area in Socialist Yugoslavia.
It is located at the centre of the spacious Nikšić Field (Nikšićko polje), a karst plain[1] with an area of 48 km2, and an elevation of 640 m AMSL.
The plain is surrounded by inhospitable rocky mountainous terrain, a typical landscape of western Montenegro.
The river caused frequent flooding of the plain, until the construction of the Perućica Hydroelectric Power Plant in 1960.