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Dixie is located at an elevation of above sea level. The community lies along the Salmon River, on the eastern edge of a broad valley that extends northward to join with the Palouse country. Dixie is situated in a narrow canyon formed by two forks of Cottonwood Creek, which flows into the Salmon River just south and east of town; this confluence forms one fork (the South Fork) that continues downriver towards Riggins. The other fork (the North Fork) flows westward through a steep gorge before joining with Cottonwood Creek near its mouth on the river; this junction forms what was once known as "Three Blaze Canyon".