It runs 34 miles (55 km) north, from the junction of U.S. Route 163 (3 miles (5 km) north of Mexican Hat), to the junction with State Route 95, just east of Natural Bridges National Monument.

The highway is part of the Utah section of the Trail of the Ancients, a National Scenic Byway.

[3] From its southern terminus north of Mexican Hat, SR-261 commences in a westerly direction.

After turning north, the route encounters the Moki Dugway, becoming an unpaved road for its ascent up onto Cedar Mesa, only to return to being paved for the rest of the route to its terminus at SR-95 just east of Natural Bridges National Monument.

[4] The Moki Dugway was constructed in 1958 by Texas Zinc, a mining company, to transport uranium ore from the "Happy Jack" mine in Fry Canyon to the processing mill in Mexican Hat.