Alcoutim is a town and a municipality in southeastern Portugal near the Portugal–Spain border. The population in 2011 was 2,917, in an area of 575.36 km². It is the least densely populated municipality in Portugal. The municipality is limited on the north by Mértola Municipality, on the east by Huelva Province in Spain, on the southeast by Castro Marim Municipality, on the southwest by Tavira Municipality and on the west by Loulé Municipality and Almodôvar Municipality. The administrative center is the town of Alcoutim, located at the extreme eastern part of the municipality on the Spanish frontier, just across the Guadiana River from the Spanish town of Sanlúcar de Guadiana in Huelva Province. The Moorish Alcoutim Castle, located in the municipality, dates from the 14th century.

The Portugal–Spain border, also referred to as "The Stripe", is one of the oldest geopolitical borders in the world. The current demarcation is almost identical to that defined in 1297 by the Treaty of Alcañices. The Portugal–Spain border is 1,214 km (754 mi) long, and is the longest uninterrupted border within the European Union, being free of border control since March 26, 1995, with a few temporary exceptions. The border is not defined for 18 km (11 mi) between the Caia river and Ribeira de Cuncos, because of the disputed status of Olivenza/Olivença, which has been disputed between the two countries for two hundred years.