The commune of Schönheide is located in the western extremity of the Ore Mountains, directly at the border with the Upper Vogtland, and can justifiably be considered one of Saxony’s most beautiful places. Schönheide lies at an elevation of up to 767 m (2516 ft), extending five kilometres (3.1 mi.) in a tributary valley of the Zwickauer Mulde river. The municipal area incorporates the subdistricts of Neuheide, Schönheiderhammer and Wilzschhaus. The Stützengrün-Schönheide museum railway and Obere Muldentalbahn railway from Schönheide to Muldenberg, which is operated by the FHWE association, are two tourist railway lines running through Schönheide.
A jewel of Schönheide is the Bürsten- und Heimatmuseum (museum of local history and brush making) located in the centre. Here, the craft of brush making, typical of the region, is preserved and demonstrated. In winter, the snowy forests surrounding Schönheide are a great place for ski tours on several kilometres of cross country ski trails. Eibenstock Dam abuts on the subdistrict of Schönheiderhammer. The Kuhberg mountain with a height of 795 m (2608 ft), which is situated above Neuheide, is very popular with hikers.