Kunak is known as the capital of the Kunak District in the Tawau Division of Sabah. The district consists of Bajau and Bugis people where a sizeable Chinese minority also exists, where they are involved in running many of the shops in downtown Kunak as well as the planting of oil palms in the outskirts.

Located few kilometres away, a resettlement scheme for Cocos Islanders is situated, near the Giram Oil Palm Estate (run by Sime Darby Berhad). About 5 km from the town in Pengkalan Kunak, there is a nearby jetty. Lined by wooden shophouses (possibly a squatter colony) a single road leads to the jetty and a wet market. A 76-bed government hospital was built in the town in 2002. At around the same time, a new highway linking Kunak to the town of Semporna was also opened.