The rich and trendy have holiday hideaways here and local artists and crafters have created a village replete with unique shops, galleries and markets. The most well known attraction is the Knysna Heads: two great sandstone cliffs guarding the mouth of the lagoon which connects the estuary with the sea. A lookout has been erected on the Eastern Head, commanding spectacular views of the lagoon, Leisure Isle and Knysna. The Western Head is a privately owned nature reserve, Featherbed Bay. The Knysna Lagoon is one of the few places along the coast and in the world that supports an oyster hatchery. And the Knysna oysters are reputedly among the tastiest in the world.

In the surrounding area, one of the most spectacular attractions is the Knysna Forest. It is the largest indigenous forest in South Africa comprising tall and ancient trees of local and exotic species, including stinkwood, yellowwood, blackwood, ironwood, white alders and Cape chestnut. Not forgetting the ferns, creepers and wild flowers that add color to this endless green collage. The forest is vast and extremely dense in places, and animal life is limited to a few small antelope and a large variety of birds, such as the famous Knysna Loerie. Home to the once great herds of Knysna Elephants, it is believed that only one lonely cow remains today. There are numerous hiking and biking trails, as well as horseback trails.

Historical attractions include Millwood House Museum and the Millwood Gold Mines. Alluvial gold was found here in 1885, which caused a rush to the area. Jubilee Creek, the exact spot where gold was found, provides a tranquil and beautiful picnic area, with many enjoyable forest walks. Buffalo Bay is the closest beach to Knysna, one of the safest for swimming along the coast and enjoyed by many holiday makers every year. It is very rocky in places, making it a great angling spot; there is also a small slipway available for small boats.