The village is surrounded by the Dainava Forest. Perloja is situated on both banks of the Merkys River, with the larger settlement on the right bank. In the forest close to Perloja there is the small but very deep lake Paperlojis. A monument of Vytautas the Great was built in 1930 and was one of the few preserved during the times of the Soviet Lithuania. In the centre of Perloja stands a church built in Neo-Gothic style (built in 1928–1930) and a monument to the Lithuanian partisans, who fought against the Russian occupation (built in 1995).
In the chaos after World War I, Lithuania scrambled to establish functioning state structures and defend itself in the Lithuanian Wars of Independence against German, Soviet and Polish soldiers. In November 1918, responding to such situation the locals established a self-governing parish committee, often called the Republic of Perloja (Perlojos respublika), chaired by Jonas Česnulevičius, veteran of the Imperial Russian Army. The Republic of Perloja had its own court, police, prison, currency (Perloja litas), and an army of 300 men. This army engaged in fights with various military units. The self-government was preserved even during the Lithuanian–Soviet War in 1919; the Parish Committee was simply renamed to a revolutionary committee. After the Polish–Lithuanian War for Vilnius Region, Perloja was in the neutral zone established by the League of Nations. In 1923, the zone was divided along the Merkys River, leaving one bank to Lithuania and another to the Second Polish Republic. The Republic of Perloja existed with interruptions until 1923.