Newhalem is a company town owned by Seattle City Light and populated entirely by employees of the Skagit River Hydroelectric Project, or in local county, state or federal agencies. The town is not open to permanent residents who do not work for these agencies. The Ross Lake National Recreation Area surrounds Newhalem on all sides, and the North Cascades National Park boundary is approximately one mile to the north and south of the town. Newhalem does not have an assigned US Postal Service zip code and thus, for postal purposes, is considered part of Rockport (98283). The name Newhalem has its roots in a local American Indian language as meaning 'Goat Snare'.
In pre-Colonial times, the site was inhabited by members of the Upper Skagits.
Newhalem has plentiful rainfall year-round, but with significantly less rainfall in the summer months than in winter. According to the Köppen climate classification, Newhalem has an Oceanic climate (Cfb).