The town is divided between Upper Dharamsala or McLeod Ganj (which retains a British colonial atmosphere), and Lower Dharamsala (the commercial centre). Upper Dharamsala (elevation about 1,700 m or 5,580 ft) is about 9 kilometers (5.6 miles) from Lower Dharmsala by road and is some 460 m (1,510 ft) higher.

McLeod Ganj, or Upper Dharamsala, is the residence of Tenzin Gyatso, the current Dalai Lama. A substantial community of Tibetan exiles resides in the town. There is also a beautiful small Anglican church, St. John church of the Wilderness, featuring some exceptional stained-glass windows, just a few hundred metres from McLeod Ganj.

There are some excellent treks from here to Triund, (3,350 m or 10,991 ft), Inderhara Pass (4,300 m or 14,108 ft) and to other beauty spots in the Dhauladhar range.

The area covered by Dharamsala is almost 29 km². During the months of December and January, snowfall is common and the temperature ranges from 0 °C to 14.5 °C. During summers, the temperature ranges from 22 °C to 38 °C. The best times to visit are from March to June or September to November.