Douglas is situated on the east of the island near the confluence point of two rivers, the Dhoo and the Glass. At Douglas, the rivers flow through the quay and into Douglas Bay. A gently sloping valley runs inland. Hills lie to the north-west and south-east.
The town is surrounded by several other smaller towns and villages, most notably Onchan to the north (which forms a conurbation with Douglas) and Union Mills to the west.