Dali is situated in the transition area between the dramatic valleys of the eastern Tibetan Plateau and the distinctive mountains of the western Yungui Plateau. The county-level city surrounds Erhai Lake between the Cang Mountains to the west and Mount Jizu to the east. The county seat at Xiaguan is located at the outlet of the lake into the Yangbi River. Dali Old Town is situated on a fertile plain between the Cang Range and Erhai. This plain has traditionally been settled by the Bai and Yi minorities.