It is situated in the Rosental/Rož Valley of the Drava River, at the northern slope of the Karawanken mountain range. The commune consists of the Katastralgemeinden of Ferlach (Borovlje), Kappel an der Drau (Kapla ob Dravi), Kirschentheuer (Kožentavra), Unterloibl (Podljublj), Waidisch (Bajdiše), Unterferlach (Medborovnica), Glainach (Glinje), Seidolach (Ždovlje) and Windisch Bleiberg (Slovenji Plajberg).
Ferlach was first mentioned as Vörelach in a 1246 deed, named after the Föhre (pine) tree, or bor in Slovene. An ironworks and forging site since the 15th century, Ferlach was known for its firearms manufacturers, the main armorer of the Habsburg Monarchy. Ferlach received town privileges in 1930 and today is a centre for the production of hunting rifles. The history of the town is depicted in its coat of arms: it features a pine tree with a cone, two crossed silver nails, and a rifle.
Ferlach lies at the junction of the BundesstraßeB85 Rosental Straße with B91 Loiblpass Straße (European route E652), running from Klagenfurt to the Loiblpass and Slovenia. The Ferlach railway line went out of service in 1951, but on summer weekends and special occasions a heritage railway service, the Rosentaler Dampfzug runs as far as Wiezelsdorf, operated by the preservation group Nostalgiebahnen in Kärnten.