Mount Gambier, 462 km south-east of Adelaide, is the south-east's unofficial capital, with a population of 21,260, and is a well-known tourist focal point, as well as an industry and business centre. Set in pleasant rolling hills, the area produces fat lambs, fine cheeses, dairy products, wool and wheat. Apart from the rich farmland, the region is home to the largest softwood timber milling industry in Australia. There are many plantation forests of radiata pine and the occasional large timber mill. The district is also famous for its Mount Gambier limestone, which is used as a building material all over southern Australia.

The town is located at the base of Mount Gambier, which is the highest point of an extinct volcanic crater that has, as its heart, a number of lakes, including Valley Lake and Browne Lake. There is a very pleasant picnic area here, and a steep walk to Centenary Tower on top of the peak, with views of the surrounding countryside. There are walking trails and boardwalks on the shore and a profusion of bird life around the lake. Nearby is Blue Lake, the deepest of the lakes near the city, set in another extinct volcano. It turns a deep cobalt blue in November before changing back to grey in late summer.

Mount Gambier was the first part of South Australia to be named in 1800 by Lieutenant James Grant, sailing by in the Lady Nelson, but it was not until 1839 that settlement began. That was a couple of years before the explorer Thomas Mitchell arrived, only to find that George Henty was already working the area. The town was surveyed in 1861 and the railway arrived in 1879. The poet Adam Lindsay Gordon served here with the mounted police in the 1850s and gained lasting fame, not only for his poetry, but also by jumping a horse over a wooden fence onto a ledge on the very lip of the Blue Lake crater.

Much of the surrounding area is limestone: the Cave Gardens in the centre of the city are a very pleasant example. Umpherstone Cave has been planted with terraced gardens and is floodlit at night; Engelbrecht Cave is open to the public, as well as to divers. Piccaninnie Ponds and Ewen Ponds, which are both closer to the coast, have crystal-clear water bubbling up from deep underground, and are excellent for snorkelling or diving. Mount Schank, further south, is another extinct volcano, and was also named as the Lady Nelson sailed the coast. A walking trail climbs this peak, and continues into the crater itself.

The city is a well-known sporting location, and regularly hosts a number of national and State events, including shooting and tennis. Annual events in town include the Country Music Festival in February, the Blue Lake Festival in March, Field Days in April and the Eisteddfod in August.