The Towy rises within 15 km (9 mi) of the source of the River Teifi on the lower slopes of Crug Gynan in the Cambrian Mountains.

This was a sturgeon (Acipwienser sturio) weighing 388 lb (176 kg) and nine feet two inches (2.79 m) in length which was caught in the river near Nantgaredig by Alec Allen on 28 July 1932.

The Towy and surrounding valley (Welsh: Dyffryn Tywi) are home to a very large variety of water and wetland birds.

Among the more distinctive species found along the river are sand martins, common sandpipers, little ringed plovers, dippers, kingfishers and grey wagtails.

In summer at Bishop's Pond in Abergwili (an oxbow lake formed when the river flooded in 1802) there is a spectacular show of yellow water lilies on the pond when the water level drops and reed sweet-grass fringes the edges – a species also found nearby in the Teifi valley further west in Pembrokeshire, in Gower, in Powys (especially along the Montgomery Canal), on Anglesey and in several sites along the North Wales coast.

On 19 October 1987, three days after the Great Storm of 1987, four people were killed when a train plunged off Glanrhyd Bridge near Llangadog into the flooded river.