East Lyme is located in southern New London County, west of Waterford and Montville, east of Lyme and Old Lyme, and south of Salem. Long Island Sound is to the south. According to the United States Census Bureau, the town has a total area of 42.0 square miles (109 km²), of which 34.0 square miles (88 km²) is land and 7.9 square miles (20 km²), or 18.89%, is water.

The town consists primarily of two villages, Flanders and Niantic. It is common for the town of East Lyme to be erroneously called "Niantic", due to this side of town being the "beach" side which is popular with tourists and visitors in the summer months. Niantic's population doubles in the summer months for the beach season, and it has a much higher density than the more sparsely populated Flanders side of town, which is known for its apple orchards, the town's high school, and forest.

The village of Niantic gets its name from the Niantic or Nehantic people, whose ranging grounds once extended from Wecapaug Brook, in what is now Rhode Island, to the Connecticut River. Shortly before the first settlers arrived, the Pequots had invaded Nehantic territory and annexed about half of the land claimed by the tribe. According to local historian Olive Tubbs Chendali:

It was the construction of the railroad in 1851 that lured people to the shoreline which up to this time had been known - not as Niantic - but as "The Bank". Long before this time, however, as evidenced by The Diary of Joshua Hempstead - 1711 - 1758 it was known as "Nahantick" "Nyantick" or "Nehantic", the home territory of the Nehantic Indians.

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