Špindleruv Mlyn is in the north of the historic Bohemia region near the border with Poland. Situated on the southern slopes of the Kozi hrbety, part of the Krkonoše Bohemian Ridge, at an altitude of 715 m (2,346 ft) to 1,310 m (4,300 ft) a.s.l., it is protected on all sides by the mountain peaks of Kozi hrbety, Plan and Mt. Medvedín. In the east rises Lucní hora at 1,555 m (5,102 ft), the second highest mountain of the Czech Republic.

Špindleruv Mlyn lies on the confluence of the river Elbe and the Dolsky creek. The Elbe source is located northwest of the town, near the Polish border and Mt. Wielki Szyszak at an altitude of 1,386 m (4,547 ft). About 1 km downstream are the Elbe Falls which cascade about 40 m (130 ft) in depth. A large dam was built in 1911-16 near Labska (Krausebauden).

The town developed as a resort town from the mid 19th century onwards. Franz Kafka stayed here for recreation in January/February 1922 and began writing of one of his most famous works, The Castle (Das Schloss).

With year-round use and with accommodation capacity of 10,000 beds, Špindleruv Mlyn is one of the most visited ski resorts in the Czech Republic, and has 20 runs, the most of all resorts in the country. During the winter season the area hosts the Europacup in freestyle skiing and SnowJam, a professional snowboarding event. Some years, e.g. 2019, the Alpine Ski World Cup has been held here. In the surroundings there are many marked hiking, mountain biking and cross-country skiing trails. Wildwater canoeing is also common on the Labe river.