Hnifsdalur is a small village of around 250 people in a valley of the same name and is positioned between Bolungarvik and Isafjordur.
The mouth of the valley is marked by the mountains Budarhyrna and Bakkahyrna, each named after a farm near its roots. The river Hnifsdalsa runs through the valley. Between Hnifsdalur and Isafjordur lies the mountain Eyrarfjall. There have been avalanches in this area, a large one occured there in 1910 resulting in a great loss of life.