Housing in Islamorada reflects its island setting and limited land. Single-family homes predominate, many with canal or bay frontage and boat access, alongside a smaller stock of condominiums and older Keys cottages. Development is constrained by the narrow island geography, so properties are limited and often oriented toward the water, with private docks common on waterfront parcels, giving the village a distinctive, marine-centered residential character.

Islamorada is spread across its five keys rather than organized around a single downtown. Plantation Key and Windley Key hold much of the village's commercial activity, while Upper Matecumbe Key and the smaller Tea Table and Lower Matecumbe keys are more residential. The result is a linear, island-hopping community tied together by the Overseas Highway rather than a conventional town center.

Life in Islamorada revolves around the water. Fishing is the defining activity, from flats guides poling skiffs over shallow grass beds to offshore boats chasing sailfish, and boating, snorkeling, and diving fill the days. The village keeps a relaxed, low-rise island pace rather than a resort-town feel, with marinas, waterfront restaurants, and marine attractions woven into daily life along the Overseas Highway.

Residents of Islamorada are zoned to schools in the Monroe County School District, which serves the entire Florida Keys from Key Largo to Key West. Treasure Village Montessori, a charter school serving pre-kindergarten through eighth grade, is located in Islamorada on the Overseas Highway. Because the village is spread across five islands, high school students commute to district campuses in the surrounding Keys communities.

The Overseas Highway, U.S. Route 1, runs the length of Islamorada, linking its five islands and connecting the village to Miami to the northeast and Key West to the southwest. All travel within and beyond the village is by road along this single spine, with Miami's airport and the mainland reached by car. The highway's bridges and causeways define the village's linear geography.

Fishing is the heart of recreation in Islamorada, from flats and backcountry angling to offshore sportfishing, with numerous charter captains and guides based in the village. Boating, snorkeling, and diving are year-round pursuits along the coral reefs and clear waters. Theater of the Sea offers marine-life shows and interactions, and nearby Indian Key and Alligator Reef add historic and natural day-trip destinations.