Loutro lies on the south coast of Chania regional unit in west Crete, between Chora Sfakion and Agia Roumeli, the exit to the Samaria Gorge. The whole area is known as Sfakia. The village got its name from the Greek word for "bath," for the many ancient baths found in the area.

Loutro is located 71 kilometers south of Chania, at the end of Cape Mouri. It is an extremely picturesque fishing village with clean, remote beaches.