Gangtok is located at . It is situated in the lower Himalayas at an altitude of . In addition to being the state capital, it is the headquarters of the East Sikkim district. The town lies on one side of a hill, with "The Ridge", a promenade housing the governor's residence, at one end and the palace, situated at an altitude of about , at the other. The city is flanked on east and west by two streams, namely Roro Chu and Ranikhola, respectively. These two rivers divide the natural drainage into two parts, the eastern and western parts. Both the streams meet the Ranipul and flow south as the main Ranikhola before it joins the Teesta at Singtam. Most of the roads are steep, with the buildings built on compacted ground alongside them.

Most of Sikkim, including Gangtok, is underlain by Precambrian rock which contains foliated phyllites and schists; slopes are therefore prone to frequent landslides. Surface runoff of water by natural streams ("jhora") and man-made drains has contributed to the risk of landslides. According to the Bureau of Indian Standards, the town falls under seismic zone-IV (on a scale of I to V, in order of increasing seismic activity), near the convergent boundary of the Indian and the Eurasian tectonic plates and is subject to frequent earthquakes. The hills are nestled within higher peaks and the snow-clad Himalayan ranges tower over the town from the distance. Mount Kanchenjunga (8,598 m or 28,208 ft)—the world's third-highest peak—is visible to the west of the city. The existence of steep slopes, vulnerability to landslides, large forest cover and inadequate access to most areas has been a major impediment to the natural and balanced growth of the city.

There are densely forested regions around Gangtok, consisting of temperate, deciduous forests of poplar, birch, oak, and elm, as well as evergreen, coniferous trees of the wet alpine zone. Orchids are common, and rare varieties of orchids are featured in flower shows in the city. Bamboos are also abundant. In the lower reaches of the town, the vegetation gradually changes from alpine to temperate deciduous and subtropical. Flowers such as sunflower, marigold, poinsettia, and others bloom, especially in November and December.

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