Undalya is a small rural town situated on the southern edge of the Clare Valley in the mid north of South Australia. It is positioned along the Horrocks Highway, located approximately halfway between the towns of Auburn and Rhynie.
The town sits at the junction of River Wakefield and Pine Creek. It is bordered by the town of Saddleworth to the east and Balaklava to the south-west. Undalya was officially gazetted under its current name in 1859.