The majority of the Forest lies in eastern Idaho and the remainder in western Wyoming. Situated next to Yellowstone and Grand Teton National Parks, the Forest is home to a diverse number of wildlife and fish, including Threatened and Endangered species, wilderness, scenic panoramas and intensively managed forest lands.

The Forest lies almost entirely within "the Greater Yellowstone Area" or "the Greater Yellowstone Ecosystem," an area of 12 million acres and the largest remaining block of relatively undisturbed plant and animal habitat in the contiguous United States. The area continues to gain prominence for its ecological integrity. The United Nations has identified the area as a Biosphere Reserve.

On a larger scale, the Forest lies along the Continental Divide, at the uppermost reaches of the Columbia River Basin, an ecosystem of 40 million acres extending from Western Washington to the Southeastern Idaho border and encompassing parts of Montana, Wyoming, Nevada and Utah. The Forest includes all or portions of several distinct mountain ranges, including the Lemhi, Beaverhead, Bitterroot, Centennial, Henry's Lake, Teton, Big Hole, Caribou, and Snake River Ranges. Elevations range from near 5,000 feet on the Snake River to over 12,000 feet on the Forest's western and easternmost reaches. The Forest contains the Island Park Caldera and several reservoirs. Topography ranges from rolling foothills to rugged, glaciated mountain peaks. Although most of the land is dry and semi-arid, 190 stream headwaters situated on the Forest provide varied vegetation to support a multitude of uses.

The land that became the Targhee National Forest was first occupied 11,000 years ago. Bands of Indians hunted herds of game that abounded at the end of the last ice age. As changes in the environment led to the extinction of many of the species that they hunted, more reliance was placed on the gathering of plants. Small groups of families left winter villages along the upper Snake River and followed the developing vegetation into the mountains during the spring and summer. In the fall the Indians began to hunt mountain sheep and other game, following the animals down to winter range near their camps. Aside from food, one of the most important resource to the Indians was obsidian, the raw material for many of their tools. Targhee obsidian was traded widely throughout the local area and beyond.

When the first white explorers and trappers arrived early in the nineteenth century, they found mounted bands of Shoshone and Bannock Indians who crossed the mountains of the Targhee to hunt bison on the northwestern Great Plains. One of their hunting trails was followed by Chief Joseph's band of Nez Perce during the Nez Perce War of 1878. The first explorers also found groups of horseless Shoshone scattered through the mountains, gathering plants and hunting. These Indians they called the Sheepeaters.