Municipality of Mrkonjic-Grad is located in the South-Western part of the Republic of Srpska, i.e in the Western part of Bosnia and Herzegovina. Coordinates are: 17º 04' 45'' eastwise and 44º 24' 08'' northwise. Mrkonjic Grad is situated 591 m above sea level and the municipality occupies 675 km² and Mrkonjic Grad comprises 37 populated areas that are divided into twenty two local communuties. The Municipality Mrkonjic Grad is bordered by the Municipality of Banja Luka in the north side, by the Municipality of Kneževo in the northeast, by the Municipality of Jajce in the east side, by the Municipality of Šipovo in the southeast side, by the Municipality of Glamoč in the south and by the municipality of Ribnik in the west.
The municipality of Mrkonjic Grad is surrounded by numerous mountains such as: Lisina mountain(1467) on the southeast side, Dimitor mountain (1483 m) on the west side, Čemernica mountain (1338 m) on the east side, Manjača (1239 m), Grabež on the north side and Ovčara-Mliništa (1576m ).
The system of both , highway and regional roads, is connected with the net of the local roads which connect the zonal centers with the economical, natural and human resources. The municipality of Mrkonjic Grad owns its natural resources upon which is based the economic and social development. The municipality is situated on the crossroad of highly important roadways.The roads that stretch through Mrkonjic Grad are: The Highway M-15 (Mrkonjić Grad (Rogilji) - Glamoč - Split), the highway М-5, the former highway of AVNOJ (Jajce - Mrkonjić Grad - Bihać), and the highway М-16 (Banja Luka - Crna Rijeka - Jajce - Split). The municipality of Mrkonjic grad is also well connected with the internetional highway Belgrade-Zagreb.