Inchelium was relocated from an earlier site in the early 1940s. Old Inchelium had been located on the banks of the Columbia River before the construction of the Grand Coulee Dam. As the waters rose behind the dam, the town had to be moved.
Inchelium is the demographic heart of the Inchelium School District and the Confederated Tribes of the Colville Reservation Inchelium Legislative District
According to the United States Census Bureau, the CDP has a total area of 26.5 square miles (68.8 km²), of which, 26.5 square miles (68.7 km²) of it is land and 0.04 square miles (0.1 km²) of it (0.11%) is water.
Inchelium is located at 48°18′48″N 118°13′18″W (48.313214, -118.221681).
North of Inchelium is Barney's Junction.
According to the Köppen Climate Classification system, Inchelium has a dry-summer Humid continental climate, abbreviated "Dsb" on climate maps.