Benalla is situated mid-way between Euroa and Wangaratta on the main road and rail route between Melbourne and Sydney.
In 1974, the Broken River, which the town lies on, was dammed, creating an attractive and wide waterway known as Lake Benalla. Swimming and boating activities are popular on the lake which is surrounded by parkland and walking tracks. On the western bank of the river lies the town's botanical gardens which feature an art gallery, the Sir Weary Dunlop memorial statue and Benalla's famous rose gardens which are home to a large variety of colourful roses. The eastern bank of Lake Benalla is lined with a recreational park adjacent to the council offices and a network of bicycle and walking tracks which traverse the several islands that exist in the lake.
North-east of Benalla is the Winton Motor Raceway which hosts car, motorcycle and superkart racing.
Surrounding Benalla are a number of natural attractions and parks worth exploring. The vast Winton Wetlands are located to the north-east, providing a sanctuary covering thousands of hectares for native flora and fauna. To the south is Reef Hills State Park, with its eucalypt forests and wildflowers, while further south is Mount Samaria State Park with granite outcrops and scenic alpine vistas.