The village of Ocracoke is located around a small sheltered harbor called Silver Lake, with a second smaller residential area built around a series of man-made canals called Oyster Creek. The village is located at the widest point of the island, protected from the Atlantic Ocean by sand dunes and a salt marsh. The average height of the island is less than five feet above sea level, and many of the buildings on the island are built on pilings to lift them off the ground. Flooding is a risk during both hurricanes and large storms. North America's second oldest lighthouse Ocracoke Lighthouse is situated near Silver Lake and has remained in continuous operation since 1823.
The island is home to what may be considered to be the only non-embassy British soil in the United States. During World War II, German submarines sank several British ships including the HMT Bedfordshire, and the bodies of British sailors were washed ashore. They were buried in a cemetery on the island. A lease for the plot, where a British flag flies at all times, was given to the Commonwealth War Graves Commission for as long as the land remained a cemetery, and the small site officially became a British cemetery. The United States Coast Guard station on Ocracoke Island takes care of the property. A memorial ceremony is held each year in May.
Ocracoke village is located at (35.112687, -75.975895). According to the United States Census Bureau, the CDP has a total area of 9.6 square miles (24.9 km²), of which, 9.6 square miles (24.8 km²) of it is land and 0.1 square miles (0.2 km²) of it (0.62%) is water.
The economy of Ocracoke Island is based almost entirely on tourism. During the winter, the population shrinks and only a few businesses remain open. During the spring, summer, and early fall, there is an influx of thousands of tourists who reside in weekly rental houses, hotels, and campgrounds. Additionally, many more visitors arrive on the ferry from Hatteras Island for the day. Several bars, dozens of restaurants, and many shops, stores and other tourist-based businesses are opened for the tourist season, and every single business on the island is independently owned and operated by residents. There are no chains or franchises, which gives the island a distinctive character.
Ocracoke was named America's Best Beach for 2007 by Dr. Stephen Leatherman, a professor of coastal ecology at Florida International University who compiles his annual list under the moniker "Dr. Beach". Ocracoke had previously earned the #2 and #3 spots in 2005 and 2006, respectively.
Fishing makes up a portion of the local economy through commercial fishing and serves to draw tourism through chartered sport fishing. With easy access to the Pamlico Sound, the coastline of the Atlantic Ocean and the Gulf Stream, the Outer Banks area has a variety of different fishing options, from small Sound fish all the way up to tuna and drum.
During the winter, the island's only main employers are construction and the businesses that support the small population. Many islanders use the winter as time off, since they tend to work between 60 and 80 hours a week during the tourist season. The permanent island population in the off season numbers only in the hundreds.
The Outer Banks area was occasionally visited by Algonquian-speaking Native Americans, but was never heavily settled. A small village on Hatteras Island is said to have had forty fighting men. The area was first described in detail by Giovanni da Verrazzano, an Italian navigator, in 1524. Verrazzano was unable to navigate the tortuous channels leading into the Pamlico Sound and assumed that China lay beyond the Outer Banks.
An attempt at an English settlement was tried at Roanoke Island in the late 16th century, but it failed. This effectively halted White settlement until 1663, when Carolina Colony was chartered by King Charles II. However, remote Ocracoke Island was not permanently settled until 1750, being a pirate haven at times before then. It was a favorite anchorage of Edward Teach/Thatch/Drummond, et cetera, better known as the pirate Blackbeard. He was killed in November 1718 in battle in Teach's Hole, a channel slightly west of the present location of Ocracoke village.
Throughout the mid- to late-1700s, the Island was home to a number of pilots, who could get smaller ships through the inlet to the Pamlico Sound. As population increased on the mainland, demand for transshipment of goods from ocean-going vessels increased. The population was listed as 139 in the 1800 census. Warehouses were built to hold goods off-loaded from larger ships offshore and then loaded onto smaller Schooners to be delivered to plantations and towns along the mainland rivers.
Fort Ocracoke, a Confederate fortification constructed at the beginning of the American Civil War, was situated on Beacon Island in Ocracoke Inlet, two miles to the west-southwest of Ocracoke village. The Confederates abandoned and partially destroyed the fort in August 1861 after Union victories on nearby Hatteras Island. Union forces razed it a month later. Beacon Island subsided beneath the waves of the inlet in the early 20th century. The remnants of Fort Ocracoke were located and identified in 1998.
By the late 19th century, the shipping business was gone, and the United States Lifesaving Service became a major source of steady income for local men. Fishing, including charters for tourists, became more important to the livelihood of the area.
There were 370 households out of which 17.6% had children under the age of 18 living with them, 46.8% were married couples living together, 8.9% had a female householder with no husband present, and 40.8% were non-families. 30.8% of all households were composed of individuals and 8.9% had someone living alone who was 65 years of age or older. The average household size was 2.08 and the average family size was 2.55.
In the CDP the population was spread out with 13.0% under the age of 18, 6.1% from 18 to 24, 28.3% from 25 to 44, 34.6% from 45 to 64, and 17.9% who were 65 years of age or older. The median age was 46 years. For every 100 females there were 96.2 males. For every 100 females age 18 and over, there were 89.0 males.
The median income for a household in the CDP was $34,315, and the median income for a family was $38,750. Males had a median income of $26,667 versus $25,625 for females. The per capita income for the CDP was $18,032. About 7.7% of families and 9.3% of the population were below the poverty line, including 13.8% of those under age 18 and 10.4% of those age 65 or over.