Underlying the Shire of Perenjori is the south west terrain of the Yilgarn Craton. The area comprises of biotite granite and gneiss rocks formed from igneous and metamorphic rocks. Underlying the northern and north eastern portions of the shire is the Youanmi terrain which also forms a part of the Yilgarn craton. These areas are comprised of rocks rich in magnesium and iron, layered sills of gabbro and dolerite and banded iron formations.
Soils are primarily deep sands and loamy earth. Saline soils, associated with a shallow water table, are associated with the narrow drainage lines and salt lakes systems of the shire. The landscape is characterised by undulating plains, sand dunes and broad ridges.
The shire is located within the Merredin Ancient Drainage Basin (AVW01) and Tallering (YAL02) IBRA sub-regions and is characterised by red sandy plains, open eucalypt and acacia woodland and proteaceous heath. The Karara & Lochada Important Bird Area is located in the shire and provides important habitat for Malleefowl Leipoa occellata. Priority 1 Minjar and Chulaar Hills Vegetation Complex and Blue Hills vegetation complex occur on banded ironstone formations in the area.
The main land uses in the Shire of Perenjori are agriculture, mining and nature conservation. Of the total land area, 37% is arable. The 469, 342 ha total area of agricultural holdings is operated by 114 agricultural businesses and produced agricultural commodities worth $132, 479, 221 gross value in 2016 (ABS 2018).