The Banwy rises in the hills near the pass which takes the A458 road between Mallwyd and Welshpool.
The river is called Nant Cerrig-y-groes at its source near Moel y Llyn.
Two miles further on, it is joined by the river Gam, which flows down from the Nant yr Eira, between Y Foel and Llangadfan.
After flowing past the small village of Llanerfyl, the river meanders between hills of moderate altitude to reach a bridge at Llanfair Caereinion.
For the last 5 miles (8.0 km) of its course it turns northwards through a narrow valley.