One of two major headwaters of the Yukon River (the other is the Stewart River), the Pelly River's drainage basin, measured above the town of Pelly Crossing, is in size. It drains a large part of the sparsely-populated Yukon Plateau of the central Yukon Territory west of the Mackenzie Mountains. The Tintina Trench, which the majority of the river's waters flow in, is the northernmost extension of the Rocky Mountain Trench, which stretches well south to British Columbia. The river is navigable by small and medium-sized craft for over , from its mouth to Hoole Rapids, except for a shallow stretch of the river in Bradens Canyon. The Yukon communities of Ross River, Faro and Pelly Crossing are all on the Pelly River. There are bridges across the Pelly in Pelly Crossing (where it crosses the Klondike Highway) and in Faro, as well as a cable ferry at Ross River on the Canol Road.