Phuentsholing is located in southwestern Bhutan at the very edge of the Himalayan foothills. It sits directly adjacent to the Indian town of Jaigaon, separated by a physical wall and the Bhutan Gate. The town rests on the banks of the Amo Chhu (also known as the Torsa River), which flows down from the Tibetan plateau through Bhutan and into the plains of West Bengal.
The surrounding geography marks a dramatic transition. To the south lies the flat, sprawling expanse of the Indian plains, while immediately to the north, the terrain abruptly rises into dense, subtropical forests and the steep slopes of the Bhutanese Himalayas. The flora is predominantly broadleaf subtropical forest, rich in biodiversity, though heavily impacted by urban expansion along the river valley.