The town lies in the southeastern part of the island of Usedom, in the so-called Achterland, on the northwest shore of the Szczecin Lagoon.

The following communities belong to the town of Usedom: The region has been settled since Neolithic times, and from the 8th and 9th centuries by ancient Slavs, who built a castle on the hill now known as the Schloßberg.

[2] In the 1120s, Pomerania was conquered by Polish monarch Bolesław III Wrymouth, who initiated Christianization, entrusting this task to Otto of Bamberg.

[4] In the thirteenth century, the German settlement of Usedom began as part of the eastern colonization (Ostsiedlung) in progress in many places at that time.

[8] After the war, the town first belonged to the state of Mecklenburg-Vorpommern until East Germany abolished the Land system in 1952, whereafter it was in the Rostock region.

Through Usedom runs the island's main south road (Federal Highway B110), connecting the town to Pinnow on the mainland, and farther afield, Anklam.