Aalo is located in the western part of Arunachal Pradesh, situated in a wide, picturesque valley. The town is defined by the confluence of two significant rivers: the Yomgo (also known as the Siyom) and the Sipu. These rivers bring vital water resources and shape the region's topography, carving deep gorges and nourishing the fertile valley floor.
The town is enveloped by dense sub-tropical, evergreen, and semi-evergreen forests that transition into alpine and temperate zones at higher elevations. The region boasts rich biodiversity, including rare orchids, medicinal plants, and various species of Himalayan wildlife. The soil is fertile and well-drained, supporting both wild flora and extensive agricultural and horticultural activities. Natural resources in the area primarily consist of timber, bamboo, cane, and abundant riverine resources.