Historically, the Tillamook economy has been based primarily on dairy farms. The farmland surrounding the city is used for grazing the milk cattle that supply the Tillamook County Creamery Association's production of cheese, particularly cheddar, gourmet ice cream and yogurt, and other dairy products. Millions of people visit the cheese factory (located north of Tillamook on Highway 101) each year.
Tillamook also serves tourists on their way to the ocean beaches and as a location for second homes.
The Tillamook Air Museum, featuring over 30 combat aircraft, lies just south of the city. Its building—a notable landmark visible from Highway 101—was a hangar built for blimps during World War II, as part of the Naval Air Station Tillamook.
According to the United States Census Bureau, the city has a total area of 1.5 square miles (4.0 km²), all of it land.
There were 1,758 households out of which 33.3% had children under the age of 18 living with them, 44.7% were married couples living together, 12.5% had a female householder with no husband present, and 37.1% were non-families. 32.1% of all households were made up of individuals and 13.1% had someone living alone who was 65 years of age or older. The average household size was 2.46 and the average family size was 3.08.
In the city the population was spread out with 29.2% under the age of 18, 9.4% from 18 to 24, 28.1% from 25 to 44, 19.6% from 45 to 64, and 13.6% who were 65 years of age or older. The median age was 33 years. For every 100 females there were 96.0 males. For every 100 females age 18 and over, there were 92.1 males.
The median income for a household in the city was $29,875, and the median income for a family was $36,351. Males had a median income of $28,458 versus $20,801 for females. The per capita income for the city was $15,160. About 11.8% of families and 15.4% of the population were below the poverty line, including 18.2% of those under age 18 and 14.8% of those age 65 or over.