Labuan island is located off the northwest coast of Borneo, north of Brunei Bay and faces the South China Sea. It comprises of the main island of Pulau Labuan and six smaller islands namely Pulau Kuraman, Pulau Daat, Pulau Rusukan Besar, Pulau Rusukan Kecil, Pulau Papan and Pulau Burung. It is located at 05 latitude North and 115 longitude East, and lies approximately 10 km southeast off the coast of the East Malaysian state of Sabah.

Labuan is only 8km or twenty minute boat ride from Menumbok, a small fishing town in Sabah. High speed air-conditioned ferries ply daily to Labuan from Sabah, Sarawak and Negara Brunei Darussalam. The trip from Kota Kinabalu, capital of Sabah takes about 3 hours and about an hour from Negara Brunei Darussalam. It is roughly equidistant from Bangkok, Jakarta, Kuala Lumpur, Hong Kong, Manila and Singapore. There are direct flights from Kuala Lumpur as well as from Brunei.

The island is mainly flat and undulating and the highest point is only 85 metres. More than 70 percent of the island is still under vegetation. Due to the fact that land utility is geared more towards property and industrial use, there is less agricultural activity in the area. Most of the island's prime land, waterfront and suburbs are utilised for residential and tourism development. A sizeable area on the south western side of the island is utilised by shipbuilding, manufacturing and oil and gas industries.

Labuan has a tropical climate with two annual monsoon seasons - the South West monsoon from April to June and the North East monsoon from September to December. It is free from hurricanes and typhoons and enjoys good climate all year round. Daily temperatures average between 28 to 32 degrees celsius.