Known as the Garden of the Gulf, the island is located in the Gulf of Saint Lawrence west of Cape Breton Island, north of the Nova Scotia peninsula, and east of New Brunswick. Its southern shore bounds the Northumberland Strait. The island has two urban areas. The largest surrounds Charlottetown Harbour, situated centrally on the island's southern shore, and consists of the capital city Charlottetown, and suburban towns Cornwall and Stratford and a developing urban fringe. A much smaller urban area surrounds Summerside Harbour, situated on the southern shore 40 km (25 mi) west of Charlottetown Harbour, and consists primarily of the city of Summerside. As with all natural harbours on the island, Charlottetown and Summerside harbours are created by rias.

The island's landscape is pastoral: rolling hills, woods, reddish white sand beaches, ocean coves and the famous red soil have given Prince Edward Island a reputation as a province of outstanding natural beauty. The provincial government has enacted laws that attempt to preserve the landscape through regulation, although the lack of consistent enforcement and absence of province-wide zoning and land-use planning has resulted in some aesthetically displeasing development in recent years.