Koror City is the largest city and the commercial center in Palau, home to about half of the country's population, located on Koror Island. During the interwar period it served as the capital of the South Seas Mandate, a group of islands that made up the League of Nations mandated territory held by the Empire of Japan. It was subsequently the capital of Palau until it was replaced by Ngerulmud in 2006.

Palau, officially the Republic of Palau, is an island country in the Micronesia subregion of Oceania in the western Pacific. The republic consists of approximately 340 islands and connects the western chain of the Caroline Islands with parts of the Federated States of Micronesia. It has a total area of 466 square kilometers (180 sq mi), making it one of the smallest countries in the world. The most populous island is Koror, home to the country's most populous city of the same name. The capital Ngerulmud is located on the largest island of Babeldaob, in Melekeok State. Palau shares maritime boundaries with international waters to the north, the Federated States of Micronesia to the east, Indonesia to the south, and the Philippines to the northwest.