Osterby is located on the Osterbek stream, about 6 kilometres (3.7 mi) west of Eckernförde in the Hüttener Berge hills, south of Hummelfeld, Fleckeby and Windeby and north of Hütten, Damendorf and Groß Wittensee.

From an early period, the inhabitants of Osterby cleared forest and bog land to add to their holdings, as shown by old farm names such as Holzkoppel, Haselhorst, Moorwiese and Wolfsbrook.

The village was hotly contested in the First Schleswig War in 1848, commemorated in a stone erected to mark the 50th anniversary in 1898, which bears the inscription Up ewig ungedeelt.

There are 11 seats on the council; since the 2013 election, five have been held by the CDU and three each by the SPD and the KWG Free Voters association.

[2] The blazon on the coat of arms of Osterby includes a silver bar of waves representing the Osterbek, with a golden sun above it and a Suebian knot in silver beneath, representing Osterby Man, a bog body skull found southeast of the village in 1948.