It is situated on the Hicacos Peninsula, between the Bay of Cárdenas and the Straits of Florida, some 140 km east of Havana. The peninsula is only 1.2 km wide at its widest point and is separated from the island of Cuba by the Kawama Channel. This spit of land however extends more than 20 kilometers from the mainland in a northeasterly direction and its tip, Punta Hicacos, is the northernmost point of the iasland of Cuba. At the northeastern end of the peninsula there is a nature reserve with virgin forest and beaches. The Hicacos Point Natural Park is a 3.12 km2 (1.20 sq mi) ecological preserve established in 1974. It contains the 250 m (820 ft) long Cave of Ambrosio, Mangón Lake (home to 31 species of birds and 24 species of reptiles) and the ruins of the La Calavera (The Skull) Salt Works (one of the first salt works to be constructed by the Spanish in the New World). The cays developed off shore, such as Cayo Piedras and Cayo Cruz del Padre are the westernmost part of the Sabana-Camaguey Archipelago.

Juan Gualberto Gómez Airport, situated west of the peninsula, is Varadero's airport. It is the second-most-important airport of the island after José Martí Airport in Havana, and serves international and domestic flights.

Varadero is foremost a tourist resort town, boasting more than 20 km of white sandy beaches. The first tourists visited Varadero as early as the 1870s, and for years it was considered an elite resort. Tourism grew in the early 1930s as Irénée du Pont, an American millionaire, built his estate on the peninsula. Many famous and infamous people stayed in Varadero, for example Al Capone. In addition to its most valued resource, the beach, Varadero has natural attractions such as caves and a chain of easily accessed virgin cays. There are also cultural, historical and environmental attractions in the vicinity, such as the cities of Matanzas and Cárdenas, the Zapata Peninsula and the resort of San Miguel de los Baños. Varadero, which is a free port, also possesses facilities for cuba diving, deep-sea fishing, yachting and other water sports.

Varadero receives more than 1 million tourists annually.