According to the United States Census Bureau, the city has a total area of 9.4 square miles (24.3 km²), of which, 6.7 square miles (17.3 km²) of it is land and 2.7 square miles (7.0 km²) of it (28.94%) is water.
As of the census of 2000, there were 1,397 people, 523 households, and 348 families residing in the city. The population density was 209.1 people per square mile (80.7/km²). There were 580 housing units at an average density of 86.8/sq mi (33.5/km²). The racial makeup of the city was 67.07% White, 0.07% Black or African American, 21.69% Native American, 0.57% Asian, 0.57% from other races, and 10.02% from two or more races. 2.79% of the population were Hispanic or Latino of any race.
There were 523 households out of which 41.1% had children under the age of 18 living with them, 49.9% were married couples living together, 11.5% had a female householder with no husband present, and 33.3% were non-families. 25.2% of all households were made up of individuals and 3.8% had someone living alone who was 65 years of age or older. The average household size was 2.63 and the average family size was 3.16.
In the city the population was spread out with 31.9% under the age of 18, 7.9% from 18 to 24, 31.8% from 25 to 44, 23.9% from 45 to 64, and 4.6% who were 65 years of age or older. The median age was 34 years. For every 100 females there were 119.7 males. For every 100 females age 18 and over, there were 118.3 males.
The median income for a household in the city was $45,298, and the median income for a family was $52,500. Males had a median income of $41,111 versus $23,558 for females. The per capita income for the city was $20,176. About 7.8% of families and 9.8% of the population were below the poverty line, including 13.4% of those under age 18 and none of those age 65 or over.
There are a few marine shipping companies providing scheduled cargo barge service to South-Eastern, Alaska. Craig is usually one of their ports-of-call, handling inter-modal shipping containers for deliveries to other communities.
In 2000, Craig had 42 vessel owners with operations in federal fisheries, 84 vessel owners with operations in state fisheries, and 149 registered crew members; 199 residents held 437 commercial fishing permits; 3,405 sport fishing licenses were sold, 2,590 licenses to non-residents of Alaska.
Commercial fishing generates much of the income in Craig. There are two harbors in the center of town one which primarily contains smaller charter and recreational boats, and the North Cove Harbor where the trollers, seiners, longliners, shrimp, crab, and dive boats that make up the local fleet are moored. During the peak of the fishing season in summer, the harbor is usually so full that boats must anchor out in the bay.
Tourism provides jobs and income to the community. Many charter fishing lodges cater to guests who visit the island for the salmon fishing as well as black bear and deer hunting.
The other main employer in Craig is the U.S. Forest Service. The rest of the economy is mainly supportive. There is a city-run medical clinic, a few restaurants, a general store, two banks, a grocery store, a coffeeshop/bookstore, clothing store, gift store, nursery and outdoor outfitter.
Alaska Power & Telephone provides hydro-electric power, telephone, and internet service to much of southeastern Alaska, including Craig. There are a few cellular carriers providing service on Prince of Wales Island, mostly to the more densely populated communities like Craig.