Two alternative etymologies have been proposed for the toponym Gusinje. One links it to Slavic guska (goose), the other to an Illyrian word Geusiae from which the Albanian name of the town, Guci(a), would have evolved.In archival records, it has been recorded variably as Gousino (Гоусино), Gustigne (1614) in Venetian archives, Gusna (گوسن) and Gusinye in Ottoman Turkis.
The town is located in the Plav-Gusinje area, part of the upper Lim valley in the Prokletije range at an elevation of ca. 1,014 m. Zla Kolata, the highest mountain in Montenegro about 10km south of Gusinje in the National Park “Prokletije”. Gusinje is traversed by the Vermosh River into which pours the Vruja Creek as it moves eastwards towards Plav. Vruja is formed at Ali Pasha‘s wellsprings (Alipašini izvori/Krojet e Ali Pashës) about 2km south of Gusinje’s center. The part of Vermosh between the location where it meets Vruja and Plav is locally called Luca. Vermosh then pours into Lake Plav. It is the first tributary of Lim. Gusinje is the seat of the municipality of the same name. From 1953 to 2014, it was part of Plav Municipality. In 2014, it became again a distinct municipality. The town’s boundaries form ~3.73 km² of the total 157 km² of the municipality. Much of the area of the municipality is mountainous land used in the past for livestock herding.