Its eastern terminus is at a T-intersection with SR 292 approximately 3.50 miles (5.63 km) southwest of West Mansfield.

The entirety of SR 540 is situated within the eastern portion of Logan County.

There are no stretches of SR 540 that are included within the National Highway System (NHS).

The NHS is a network of routes identified as being most important for the nation's economy, mobility and defense.

Originally, the highway was routed along the portion of its current alignment from its intersection with County Road 25 (CR 25) about 2 miles (3.2 km) east of Bellefontaine to its present eastern terminus at SR 292.