Located 110 kilometres (68 miles) north of Dunedin, it lies in the dry rough plain of Maniototo at a moderately high altitude (around 430 metres or 1,410 feet above sea level) close to a small tributary of the Taieri River.

The town was formerly known as Eweburn, one of the "farmyard" names bestowed by former Otago Chief Surveyor John Turnbull Thomson on many small streams and locations in the district.

The modern name honours the Fifth Earl of Ranfurly, who served as Governor of New Zealand (1897–1904) at the time of the extension of the Otago Central Railway to the area.

During the Otago gold rush of the 1860s, several important deposits of the precious metal were found near Ranfurly, notably at Kyeburn and Naseby, close to the southwestern face of the Kakanui Range.

The nearby Ida Valley functioned as one of the locations for Peter Jackson's 2001–2003 Lord of the Rings film trilogy, representing the wide plains of Rohan.

Central Otago in general, and the Maniototo in particular, has one of New Zealand's very few zones influenced by continental climates, with large daily and seasonal temperature extremes.

The Nor'wester foehn wind is thus a frequent weather pattern, and annual rainfall is only in the region of 400–500 mm (16–20 in).