The municipality of Muskiz occupies a land area of 21.50 square kilometres. It stands in the Somorrostro Valley, in the most north-westerly part of the Historical Territory (or province) of Bizkaia. It is bounded to the north by the Cantabrian Sea (part of the Bay of Biscay), to the east by the municipalities of Ziérbena and Abanto y Ziérbena, to the west by the region of Cantabria and to the South by the municipalities of Galdames and Sopuerta (Encartaciones).

The main road leading into Muskiz is the A-8 motorway, linking Bilbao and Santander. It can also be reached from Burgos by local and secondary roads through the Encartaciones area.