Dharamshala is a city in the upper reaches of the Kangra Valley and is surrounded by dense coniferous forest consisting mainly of stately Deodar cedar trees. The suburbs include McLeodGanj, Bhagsunath, Dharamkot, Naddi, ForsythGanj, Kotwali Bazaar (the main market), Kaccheri Adda (government offices such as the court, police, post, etc.), Dari, Ramnagar, Sidhpur, and Sidhbari (where the Karmapa is based). The Municipality of Dharamshala is one of the oldest Municipalities. It was established on May 6, 1867. The Municipal area is 27.6 Sq. Km. In 1855 it was declared as the headquarters of Kangra District.

The village of McLeodGanj, lying in the upper reaches, is known worldwide for the presence of the Dalai Lama. It is named after Sir Donald Mcleod, the former Governor of the province. On 29 April 1959, the 14th Dalai Lama (Tenzin Gyatso) established the Tibetan exile administration in the north Indian hill station of Mussoorie. In May 1960, the Central Tibetan Administration (CTA) was moved to Dharamshala.

Dharamshala is the centre of the Tibetan exile world in India. Following the 1959 Tibetan uprising there was an influx of Tibetan refugees who followed the 14th Dalai Lama. His presence and the Tibetan population has made Dharamshala a popular destination for Indian and foreign tourists, including students studying Tibet.

The town is located at different levels up a spore of the Dhauladhar range. The lower part of the town is situated at an altitude of 1250 meters above mean sea level and the upper part of the town is at an altitude of 2100 meters above mean sea level. Its geographical co-ordinates are 23-13 North Latitude and 76-19 East Longitude. It is well connected with the important towns & cities of Himachal Pradesh and Other States like Shimla, Kullu, Pathankot, Chandigarh, Delhi through network of roads and highways. It is also linked to Delhi by Air.