Named after Milford Haven in Wales, the hometown of Captain John Grono who discovered it around 1812. A few years later it was renamed to Milford Sound by Captain John Lort Stokes. Prior to the European arrival the fiord was a playground for the local Māori who understood the migrations of local marine life and the tidal patterns.

Milford Sound runs 15 kilometres inland from the Tasman Sea at Dale Point - the mouth of the fiord - and is surrounded by sheer rock faces that rise 1,200 metres (3,900 ft) or more on either side. Among the peaks are The Elephant at 1,517 metres (4,977 ft) and The Lion, 1,302 metres (4,272 ft). Lush rain forests cling precariously to the cliffs and occasionally portions of the rain forest will lose their grip on the sheer rock face, the resulting tree avalanches leave scars of bare rock amongst the vegetation.

The sound sports two permanent waterfalls (Lady Bowen & Stirling Falls), although after prolonged rainfall many more additional waterfalls can be seen cascading down the sheer rock faces. As Milford is renowned as the wettest inhabited place in New Zealand and one of the wettest in the world it is commonplace to see these temporary falls.