Yihun Lhatso rests in a valley on the north side of the Chola Mountains at the foot of Rongme Ngatra. It is found 10km south of the town of Manigango in Dege County, Garze Prefecture. The lake occupies a u-shaped valley and is contained by the former terminal moraine of a glacier originating from Rongme Ngatra that has now receded to above sea level. The lake is drained by the Tro Chu (), a tributary of the Yalong River which eventually joins with the Yangtze. The lake is passed by Highway 317 on its way over Cho La mountain pass.