Formed by the confluence of the West Branch and East Branch of the river, the Morwell River rises in the Strzelecki Ranges, below Boolarra South. The river flows generally in a northerly direction, joined by two minor tributaries before reaching its mouth to form confluence with the Latrobe River, south of Yallourn North. The river descends 156 metres (512 ft) over its 41-kilometre (25 mi) course. The lower reaches of the river has been diverted around open-cut coal mines by channels and pipelines until it enters the Latrobe River.
On 6 June 2012, a levee bank failure resulted in the flooding of the Yallourn coal mine causing damage to its infrastructure and cutting fuel supply to the adjacent power station.