Located at the northern tip of the relatively narrow Esowista Peninsula, Tofino's development pattern is restricted by ocean on three sides. Future village expansion is limited to a southerly direction. Pacific Rim Highway, which runs up the middle of the peninsula, divides the peninsula into east and west sectors. On the west side of the peninsula, large expansive beaches with rugged headlands create a dramatic setting. Along the east shore of the peninsula, tidal flats extend well out into Browning Passage. Future expansion is limited to the south as the community borders Pacific Rim National Park Reserve.

Tofino is situated within one of the most dramatic and pristine landscapes on the southern coast. It is part of the Clayoquot Sound UNESCO (United Nations Educational, Scientific and Cultural Organization) Biosphere Reserve, an internationally recognized area that includes terrestrial and marine environments and extends from the southern boundary of the Long Beach Unit of Pacific Rim National Park Reserve to just north of Estevan Point. The Reserve includes approximately 350 000 hectares of which nearly 83 000 hectares are marine.

These locational considerations suggest that Tofino will have to manage growth carefully to ensure that its limited land base is planned efficiently and carefully, and in a manner that complements the Clayoquot Sound UNESCO Biosphere Reserve and Pacific Rim National Park Reserve.