Schönheide is five kilometres long, and lies in the west of the District of Aue-Schwarzenberg, mostly in a side valley of the River Zwickauer Mulde, which forms the community's southern boundary.

In the north lies Stützengrün, in the east and southeast Eibenstock, in the west Auerbach and Rodewisch, and in the northwest Steinberg.

Between 1880 and 1900, a number of public buildings were erected, and are still standing, including the Town Hall (1882), Post Office (1891), Hauptschule (1856–98), Flemmings Fabrik - factory (1896) and Lenks Villen - villas (ca 1900).

From 1914 to 1945 there was widespread joblessness and poverty throughout the Ore Mountains and Schönheide was no exception, due to the impact of both World Wars and the intervening Great Depression.

In 1974, construction of the Eibenstock Reservoir was commenced and flooded the railway line between Blauenthal and Schönheide Ost.

Estimated population (31 December, source: Statistisches Landesamt des Freistaates Sachsen): Since the 1994 municipal elections, the CDU has had ten seats, the UWG (de) four, the PDS two and the SPD one.