The town is located at the north end of the lake Heddalsvatnet, at the mouth of the river Tinnelva.

The villages of Heddal and Yli lie about 5 kilometres (3.1 mi) to the west of the town.

The villages of Hjuksebø and Hjuksevelta both lie about 8 kilometres (5.0 mi) to the south of the town.

This essentially granted town status and special economic rights for the growing urban area.

On 1 January 1964, the town (population: 7,523) was merged with the following areas to create the new Notodden Municipality:[5]