It borders the municipalities of Mexicali to the north, Ensenada to the northwest, San Quintín to the west and south, and the Gulf of California to the east.

[3] Picacho del Diablo, the highest point in Baja California at 3,095 metres (10,154 ft), lies within the municipality.

Fernando Consag made the first description of the bay in 1746, and Wenceslaus Linck became the first European to reach San Felipe by land in 1766.

[2] Important economic activities in San Felipe include commerce, tourism, real estate, and fishing.

San Felipe receives approximately 250,000 visitors per year, including a significant number of American and Canadian retirees.

The port of San Felipe is located just south of the municipal seat and serves both commercial and recreational boats.