Geographically it is situated by the western shore of lake Vättern. The large and fish rich waters have been the main influenced on the industry. the largest rivulet intersecting the municipality from Vättern in the Hjo River. Parts of it have been made a nature reserve. Partly this is due to the salmon (i

Hjo was known to have had a charter already in 1413, and was an important site for merchandice eastward.

Many wooden towns have suffered fires, but Hjo has been relatively spared, apart from when the church and some adjecent houses burnt down in 1794. The city structure is therefore almost exactly the same as in the medieval times.

It works together with the towns Eksjö and Nora, to develop wooden towns as tourism attraction, under the joint name "Three wooden towns" (i