The island is a high-lying reef of "ironshore" (limestone fringes with numerous marine fossils), with a highest elevation of roughly 24 metres above sea level. There is no natural fresh water (lakes, rivers, etc) on the island, so any fresh water needs must be met by catchments or desalination of seawater. The lack of rivers does however account for the exceptional clarity of the sea.

The island was devastated by Hurricane Ivan in 2004 from September 11 to September 12. With Category 5 strength, Ivan passed within 30 miles (48 km) of Grand Cayman, hitting it with winds over 180 mph (290 km/h) and gusts up to 200 mph (320 km/h). The island reported no more than a few deaths - none directly caused by the hurricane - but over 80% of the buildings were either damaged or completely destroyed. Ivan was the worst hurricane to hit the island in 86 years.

The eastern side of the island is somewhat undeveloped, while the western side of the island, which holds George Town and the airport, Owen Roberts International Airport, is more developed. Fast food restaurants, night clubs and resorts can be found on the western side of the island. The eastern districts offer more restaurants specialising in native Caymanian cuisine.