Lago Tepuhueico occupies the south-central portion of Isla Grande de Chiloé, within the comuna of Chonchi, Provincia de Chiloé, in the Los Lagos Region of Chile. The lake sits at an elevation of 25 meters above sea level and covers a surface area of 14.3 square kilometers, with a maximum length of 5.2 km and a maximum width of 3.1 km. Its catchment basin of 182.1 square kilometers consists largely of gentle slopes and hilly terrain blanketed in native forest. Average depth is 9 meters, with a maximum depth of 25 meters, and total water volume of approximately 0.128 cubic kilometers. The shoreline extends roughly 24.7 km. The lake drains into the Pacific watershed.

The surrounding landscape is dense temperate rainforest composed of coigüe, canelo, tepú, and arrayán. The waters are notably clear and reflect the surrounding forest cover. The lake is considerably less visited than nearby Lago Huillinco and Lago Cucao, which contributes to a quieter paddling environment. It is part of a large private temperate rainforest reserve — Parque Tepuhueico — considered one of the more significant private conservation areas of its kind.

Access to the lake is via Castro, heading toward Chonchi, then approximately 4 km past the junction toward Quellón before turning onto the road toward Huillinco. The road to Huillinco is paved. In the town of Huillinco, a sign in front of the church marks the direction to Parque Tepuhueico. The park lodge serves as the primary base of operations, with a dock providing lake access. Organized boat excursions depart from this dock and navigate the lake before entering the Río Los Codos. Kayaking and canoeing are explicitly offered as activities within the park.

Wildlife in and around the lake includes choroyes, black woodpeckers, pudú, and the zorro chilote. The monito del monte, an endangered marsupial, is also present in the reserve. The park contains Plaza Los Mañíos, a site featuring ancient trees reported to be over 600 years old. Fishing is permitted and is recommended from a float tube or boat; trout are present, and streamers such as green and black Woolly Buggers are noted as effective.

The lodge at Parque Tepuhueico provides accommodation, restaurant, bar, picnic areas, and packed lunches, making it a functional base for multi-day paddling visits.