The shire lies on the South West Terrain, which forms part of the Yilgarn Craton and consists of granite rock, gneiss and minerals rich in iron and magnesium. Soils are a mixture of loamy calcareous earth, deep sands and sandy earth. Sodic subsoils of loamy and red loamy duplexes also occur in the area. The landscape of the shire is characterised by undulating sandplain, valley floors and alluvial flats and a salt lake chain associated with an ancient drainage system.
The shire is located within the Tallering (YAL02) and Merredin (AVW01) IBRA sub-regions and is characterised by low open woodlands and proteaceous scrub. One Priority Ecological Community occurs in the shire – the Red Morrell Eucalyptus longicornis woodland of the Wheatbelt.
The main land use in the Shire of Dalwallinu is agriculture. Of the total land area, 64% is arable. The 602, 417 ha total area of agricultural holdings is operated by 177 agricultural businesses and produced agricultural commodities worth $215, 732, 670 gross value in 2016 (ABS 2018).