Shetland is around 170 kilometres (110 mi) north of mainland Scotland, covers an area of 1,468 square kilometres (567 sq mi) and has a coastline 2,702 kilometres (1,679 mi) long.

Lerwick, the capital and largest settlement, has a population of 6,958 and about half of the archipelago's total population of 23,167 people live within 16 kilometres (10 mi) of the town.

Scalloway on the west coast, which was the capital until 1708, has a population of less than 1,000.

Only 16 of about 100 islands are inhabited. The main island of the group is known as Mainland and of the next largest, Yell, Unst, and Fetlar lie to the north and Bressay and Whalsay lie to the east. East and West Burra, Muckle Roe, Papa Stour, Trondra and Vaila are smaller islands to the west of Mainland. The other inhabited islands are Foula 28 kilometres (17 mi) west of Walls, Fair Isle 38 kilometres (24 mi) south-west of Sumburgh Head, and the Out Skerries to the east.

The uninhabited islands include Mousa, known for the Broch of Mousa, the finest preserved example in Scotland of these Iron Age round towers, St Ninian's Isle connected to Mainland by the largest active tombolo in the UK, and Out Stack, the northernmost point of the British Isles. Shetland's location means that it provides a number of such records: Muness is the most northerly castle in the United Kingdom and Skaw the most northerly settlement.

The geology of Shetland is complex, with numerous faults and fold axes. These islands are the northern outpost of the Caledonian orogeny and there are outcrops of Lewisian, Dalriadan and Moine metamorphic rocks with similar histories to their equivalents on the Scottish mainland. Similarly, there are also Old Red Sandstone deposits and granite intrusions. The most distinctive features are the ultrabasic ophiolite, peridotite and gabbro on Unst and Fetlar, which are remnants of the Iapetus Ocean floor. Much of Shetland's economy depends on the oil-bearing sediments in the surrounding seas.

Geological evidence shows that in around 6100 BC a tsunami caused by the Storegga Slides hit Shetland, as well as the rest of the east coast of Scotland, and may have created a wave of up to 25 metres (82 ft) high in the voes where modern populations are highest.

The highest point of Shetland is Ronas Hill, which only reaches 450 metres (1,480 ft) and the Pleistocene glaciations entirely covered the islands. The Stanes of Stofast is a 2000 tonne glacial erratic that came to rest on a prominent hilltop in Lunnasting during this period.

Shetland is a National Scenic Area, although unusually this single designated area is made up of a number of discrete locations: Fair Isle, Foula, South West Mainland (including the Scalloway Islands), Muckle Roe, Esha Ness, Fethaland and Herma Ness.

In AD 43 and 77 the Roman authors Pomponius Mela and Pliny the Elder referred to the seven islands they call Haemodae and Acmodae respectively, both of which are assumed to be Shetland. Another possible early written reference to the islands is Tacitus' report in AD 98, after describing the discovery and conquest of Orkney, that the Roman fleet had seen "Thule, too". In early Irish literature, Shetland is referred to as Inse Catt - "the Isles of Cats", which may have been the pre-Norse inhabitants' name for the islands. The Cat tribe also occupied parts of the northern Scottish mainland and their name can be found in Caithness, and in the Gaelic name for Sutherland (Cataibh, meaning "among the Cats").

The oldest version of the modern name Shetland is Hetlandensis, the Latinised adjectival form of the Old Norse name recorded in a letter from Harald count of Shetland in 1190, becoming Hetland in 1431 after various intermediate transformations. It is possible that the Pictish "cat" sound forms part of this Norse name. It then became Hjaltland in the 16th century.

As Norn was gradually replaced by Scots, Hjaltland became Shetland. The initial letter is the Middle Scots letter, "yogh", the pronunciation of which is almost identical to the original Norn sound. When the use of the letter yogh was discontinued, it was often replaced by the similar-looking letter z, hence Zetland, the misspelt form used to describe the pre-1975 county council.

Most of the individual islands have Norse names, although the derivations of some are obscure and may represent pre-Norse, possibly Pictish or even pre-Celtic names or elements.