The island itself is situated about 20 miles east of the mainland on the northern portion of the country. Ambergris Caye actually is the far southern tip of the Yucatan Peninsula. The only thing separating the island from Mexico is a channel that was hand dug by the Maya to facilitate trade and transportation. The cayes are a diver's, snorkeler's, birder's, and fisherman's paradise. The amazing coral reef system, the second largest in the world, lies one-half mile east of the shoreline and runs the entire 25 mile length of the island. This has made San Pedro Town the dive and water sports capital in the western Caribbean. The Great Blue Hole, Turneffe Islands, Shark Ray Alley, Hol Chan Marine Reserve, Mexico Rocks, Lighthouse Reef, and many other diving areas are all only a short boat ride away.

The Belize mainland is a short boat or plane ride from Ambergris Caye, allowing a visitor to stay in the Cayes yet visit Belize national parks, reserves, Maya ruins, and other rainforest attractions.