The town takes its name from its geographical position between the lakes (in Latin inter lacus). The Aare flows through the town from one to the other lake, whilst the L?tschine flows from the mountains from the south into Lake Brienz however not running through the municipality of Interlaken.

The name Interlaken is derived from its unique geographical position in the Swiss Alps. Literally translated from Latin (inter lacus), the name means "between lakes." The town is nestled on a flat piece of alluvial land called the Bödeli, wedged strategically between the pristine waters of Lake Thun to the west and Lake Brienz to the east. The Aare River flows gracefully through the center of the town, connecting the two lakes and further emphasizing the town's water-locked identity. Historically, the area was known as Aarmühle, but it officially adopted the name Interlaken in the late 19th century as it transformed into a world-renowned resort destination. Today, the name serves as a perfect descriptor for its role as a gateway to the Bernese Oberland region, offering stunning vistas where emerald waters meet the towering peaks of the Eiger, Mönch, and Jungfrau mountains.