According to the 2023 INE census, the municipality has a population of 1,145 inhabitants, the majority of whom live in the town of Velilla itself.

The village straddles either side of the Carrión river, a tributary of the Pisuerga and eventually the Duero.

Velilla's town centre is overlooked by two prominent mountains: Peña Lampa (1804m, which forms the provincial border between Palencia and León) and the Peña Mayor de Velilla (1869m) in the adjacent Sierra de Brezo.

The Cantabri, a pre-Roman tribal federation who lived in northern Iberia in the second half of the first millennium BCE, were the area's first inhabitants and possibly constructed the town's famous Fontes Tamarici.

Although its original Cantabri name was Tamarica, the town was known as Velilla de Guardo until 1949, when it adopted its present name, which describes its position on the Carrión river.