Perast lies beneath the hill of St. Elijah (873 m), on a cape that separates the bay of Risan from the bay of Kotor (two smaller bays within the Boka Kotorska) and overlooks the Verige strait, the narrowest part of Boka. The average yearly temperature in Perast is 18.3°C, and the number of sunny days is 240 (or around 2,500 sunny hours per year).

Near Perast there are two small islands: one is called St. George, and the other called Gospa od Škrpjela (Our Lady of the Rock), and each of them has a picturesque chapel. Gospa od Škrpjela is particularly interesting given that it is the only artificially built island in the Adriatic, with an area of 3,030 m² — it was built upon a rock (Škrpjel) after two sailors from Perast found a picture of the Virgin Mary on it in 1452.

The old city does not have a defensive wall, but instead it has nine defensive towers, the most important of which is the tower of the Holy Cross. These were built by the navy of the Venetian Republic in the 15th and 16th centuries, as Venice owned the city between 1420 and 1797. The city's sixteen Baroque palaces were mostly built in this period, too, as were its seventeen Catholic churches and two Orthodox churches.

Perast was at its peak in the 18th century, when it had as many as four active shipyards, a fleet of around one hundred ships, and 1,643 residents. The population has since decreased to 430 in 1910 and around 360 today. The fleet was extinguished by the rise of the steam engine