Ouray is located at (38.023217, −107.672178), in the San Juan Mountains of southwestern Colorado. It is about south of Montrose. It is only northeast of Telluride, but due to the severity of the landscape, the drive is about . Ouray is connected to Silverton and then Durango to the south by Red Mountain Pass which crests at just over . The drive along the Uncompahgre River and over the pass is nicknamed the Million Dollar Highway, although the exact origin of the name is disputed. Yankee Boy Basin is located a few miles from the town.