The municipality of Bakio is part of the region of URIBE, 12 kms from Mungia and 12 kms from Bermeo, surrounded by the hills of Mt. Burgoa (447 m), Mt. Garbola (474 m) and Mt. Jata (592 m). The first of these two are situated on the mountain range which descends from Mt. Sollube to Cape Matxitxako, whilst the third one, Mt. Jata, provides the division between Bakio, San Juan de Gaztelugatxe and the Rock of Aketxe.

Two rivers cross the plain of Bakio: the main river is the Zarraga, which receives its waters from its namesake, Zarraga gorge, and from the gorges of Elorriaga, Karrakola, Amutzaga and Osinaga and also numerous streams, before ending next to the harbour, and the small Ondarra, starting at the foot of Mt. Burgoa and Mt. Garbola, which flows down to the coast.

Covering an area of 16.12 km², Bakio has 112 Basque farmhouses distributed among 7 districts: Artzalde, Basigo (Elexalde, through to mid-20th century), Bentalde, Goitisoloalde, Urkitzaurralde, San Pelaio and Zubiaurralde. To the north it borders with the Bay of Biscay, to the south with Mungia, to the east with Bermeo and to the west with Mungia, Maruri-Jatabe and Lemoiz.

Access to the municipality from Mungia is by way of the BI-3101 local road and from Lemoiz by taking the BI-2153 (Lemoiz-Armintza) and BI-3152 (Armintza-Bakio) regional roads, with the usual form of public transport being the BizkaiBus public bus route.