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The town is located at the mouth of the Grey River, on a narrow coastal plain close to the foot of the Southern Alps.

Greymouth is on State Highway 6, which connects it with Hokitika in the south and Westport in the north. It also stands at the terminus of State Highway 7, which runs through Dobson and Reefton, eventually reaching North Canterbury and its junction with State Highway 1 at Waipara (55 km north of Christchurch) via Lewis Pass.Highway 73 is accessed just 20 kilometers south of Greymouth, which is the most direct route to or from Christchurch. The town is also the western terminus of the Midland line from Christchurch. Large coal trains often operate from Greymouth on this line to Christchurch.

The famous TranzAlpine train also terminates at Greymouth.