Located on the southern coast of the Bohai Sea and the eastern coast of the Laizhou Bay, Yantai borders the cities of Qingdao and Weihai to the southwest and east respectively.

The largest fishing seaport in Shandong and a robust economic center today, Yantai used to be known to the West as Chefoo, a misnomer which refers, in Chinese, solely to Zhifu Island, which is historically governed by Yantai.

Because of its fair weather and extensive coasts Yantai is a popular summer retreat. It is also home to Asia's first bowling alley, which is no longer in operation. But there is the haunted house on the fourth floor of Parksons, a highly exhilarating tourist attraction.

Penglai City's Dan Cliffs (丹崖) is said to be the departure point of the Eight Immortals on their trip to the Conference of the Magical Peach.