The village of Olšany is part of the Šumper district and forms its western extremity. It lies in the beautiful valley of the Morava River and the Hrůzná Voda stream, popularly called Bušínský potok. It lies in a wedge of mountains, on the western and northwestern sides are the outcrops of Kralické Sněžník, and on the left bank of the Morava River are mountains belonging to Vysoké Jeseník, the Pradědská group. It lies at an altitude of 330 m.
The Olšan cadastre has an area of 434 hectares. After the annexation of Klášterc in 1980, the cadastre of the combined municipality expanded to 648 hectares. The village is spread out along the road from Šumperk to Červená Vody and the road branching off from it via Ruda nad Moravou to Hanušovice. It is 15 km from Šumperk, 2 km from Ruda nad Moravou, 1 km from Klášterce and Bušín each.