Cottonwood is just west of U.S. Route 95, between Grangeville and Lewiston.
The Cottonwood Butte ski area is west of the city, on the east face of the mountain of the same name.
Also west of the city is St. Gertrude's Convent, begun in the early 1900s. The order of Benedictine nuns traces their history to twelfth century Switzerland. The chapel at St. Gertrude's is among the most ornate in the state.
As of the census of 2000, there were 944 people, 364 households, and 242 families residing in the city. The population density was 1,136.4 people per square mile (439.1/km²). There were 398 housing units at an average density of 479.1/sq mi (185.1/km²). The racial makeup of the city was 97.99% White, 0.64% Native American, 0.42% Asian, and 0.95% from two or more races. Hispanic or Latino of any race were 0.42% of the population.
There were 364 households out of which 34.6% had children under the age of 18 living with them, 54.7% were married couples living together, 8.2% had a female householder with no husband present, and 33.5% were non-families. 28.8% of all households were made up of individuals and 15.4% had someone living alone who was 65 years of age or older. The average household size was 2.51 and the average family size was 3.14.
In the city the population was spread out with 29.7% under the age of 18, 6.3% from 18 to 24, 24.6% from 25 to 44, 21.5% from 45 to 64, and 18.0% who were 65 years of age or older. The median age was 39 years. For every 100 females there were 94.2 males. For every 100 females age 18 and over, there were 94.2 males.
The median income for a household in the city was $34,167, and the median income for a family was $39,625. Males had a median income of $30,833 versus $20,833 for females. The per capita income for the city was $15,003. About 5.8% of families and 10.7% of the population were below the poverty line, including 6.7% of those under age 18 and 6.2% of those age 65 or over.