The commune is named after Futaleufú River. Due to the eruption of Chaitén Volcano and the subsequent destruction of Chaitén, Futaleufú has been the capital of Palena Province since March 2009. The town is close to the Argentine border and has a population of about 2,000. The main income for the community is fly fishing and white water rafting tourism together with forestry and cattle farming. A gravel road links the town to Trevelin in Argentina and to the Carretera Austral.
As a commune, Futaleufú is a third-level administrative division of Chile administered by a municipal council, headed by an alcaldewho is directly elected every four years. The 2008-2012 alcalde is Arturo Carvallo Pardo (PDC).
Within the electoral divisions of Chile, Futaleufú is represented in the Chamber of Deputies by Gabriel Ascencio (PDC) and Alejandro Santana (RN) as part of the 58th electoral district, (together with Castro, Ancud, Quemchi, Dalcahue, Curaco de Vélez, Quinchao,Puqueldón, Chonchi, Queilén, Quellón, Chaitén, Hualaihué and Palena). The commune is represented in the Senate by Camilo Escalona Medina (PS) and Carlos Kuschel Silva (RN) as part of the 17th senatorial constituency (Los Lagos Region)