The highway, connecting the Northern Areas of Pakistani Kashmir to the ancient Silk Road, runs approximately 1,300 km from Kashgar, a city in the Xinjiang region of China, to Havelian, located in the Abbottabad District of Pakistan. An extension of the highway meets the Grand Trunk Road at Hasan Abdal, west of Islamabad, Pakistan.

The highway cuts through the collision zone between the Asian and Indian continents, where China, Tajikistan, Afghanistan, Pakistan and India come within 250km of each other. Owing largely to the extremely sensitive state of the Kashmir conflict between India and Pakistan, the Karakoram highway has strategic and military importance.

On June 30, 2006, a memorandum of understanding was signed between the Pakistani Highway Administration and China's State-owned Assets Supervision and Administration Commission (SASAC) to rebuild and upgrade the KKH. According to SASAC, the width of the highway will be expanded from 10 meters to 30 meters, and its transport capacity will be increased three times. As well, the upgraded road will be constructed to particularly accommodate heavy-laden vehicles and extreme weather conditions.

China and Pakistan are also planning to link the Karakoram Highway to the southern port of Gwadar in Balochistan through the Chinese-aided Gwadar-Dalbandin railway, which extends up to Rawalpindi.