To the west of the municipality is the Lagoa Mirim and beyond that is Uruguay; to the east and southeast lies the Atlantic Ocean, and to the north is the city of Rio Grande.

The municipality lies on a windy coastal plain which is a mosaic of sand dunes, lagoons (Lagoa Mangueira being the largest one), marshland spots and rice farms.

The city's economy is based on rice growing, beef cattle and sheep raised for wool, in addition to being a transit point on BR-471, the main highway linking Brazil and Uruguay.

Its coast also includes the larger part of Cassino Beach, the world's longest uninterrupted stretch of sandy ocean shore, over 240 km (150 mi) from the stony breakwaters of Rio Grande in the north to the mouth of Chuí River in the south.

Two small beach resort villages are located in the municipality: Praia do Hermenegildo and Barra do Chuí, which is Brazil's southernmost inhabited place.