The city is located in the northern bay of Lake Vättern.
The town Askersund traces its origin from the 14th century. In 1643 it was significant enough to received its charter as one of the cities in Sweden. Despite its small size Askersund is for historical reasons normally still referred to as a city, although Statistics Sweden nowadays defines a city as a locality with more than 10,000 inhabitants.
In the 19th century, Askersund was planned to be the site of one of the two supply fortresses for Karlsborg Fortress, located on an island in lake Vättern, now belonging to Karlsborg Municipality.