Kolašin is situated in the central and northern part of Montenegro southwest of Bjelasica Mountains.

Kolašin is the centre of Kolašin municipality; and it is the seat of the Biogradska Gora National Park. Besides Žabljak, Kolašin is one of the main centers of Montenegrin mountain tourism.

It has a very favorable geographic position as the Beograd – Podgorica highway and the Belgrade-Bar railway also run through this the town.

Its mountainous location (Bjelasica and Sinjajevina Mountains) offers great conditions for skiing. Kolašin is also considered as a spa town as Bianca Resort & Spa resort was opened in the town's center.