Town in the south part of Lika, is located on the lower flow of river Oruca. Economy is based on farming, livestock breeding, as well as on food, textile, leather and footwear industries. Gračac is located at the intersection of the main roads Gospic - Gračac, Karlovac - Zadar and the regional roads which connect the central part of Croatia and the northern part of the Croatian Primorje and Lika, with the northern and central Dalmatia.

In the vicinity of the Catholic Church are traces of a mediaeval town Gradina. The town was first mentioned in 1302. The Baroque parish church of St. George from the 18th century was badly damaged in the Second World War.

Gračac is an important transit place. Its surroundings offer excellent opportunities for hunting, mountaineering tours toward Velebit The cave system Cerovacke Spilje is one of the most interesting karst phenomena of Velebit.