The city stands on a bay in the Aegean with the peninsula of Guvercin Ada sticking out into the sea at one end, and the mountain of Kaz Dağı behind.

It is 90 km (56 mi) south of İzmir, the region's largest metropolitan center. It is 71 km (44 mi) from the provincial seat of Aydın situated inland.

The Yavansu Fault Line passes near Kusadasi and there have been earthquakes here throughout history.

Kusadasi has a residential population of 50,000 rising to over half a million during the summer when the large resort fills with tourists (from Turkey itself, northern Europe and the Balkans), plus the hotel staff, bar staff, construction workers, and drivers who are needed for work in the restaurants, the holiday villages, aquaparks, rock bars beach clubs and big hotels servicing all these visitors. In addition to the visitors from overseas there is a substantial community of foreigners resident in the area.