The town is located along the western shore of East Okoboji Lake, in the Iowa Great Lakes region. Spirit Lake is served by KUOO-FM and KUQQ-FM.
As of the census of 2000, there were 4,261 people, 1,792 households, and 1,130 families residing in the city. The population density was 1,280.2 people per square mile (494.0/km²). There were 2,024 housing units at an average density of 608.1/sq mi (234.7/km²). The racial makeup of the city was 98.99% White, 0.14% African American, 0.12% Native American, 0.05% Asian, 0.09% from other races, and 0.61% from two or more races. Hispanic or Latino of any race were 0.63% of the population.
There were 1,792 households out of which 29.3% had children under the age of 18 living with them, 50.6% were married couples living together, 10.3% had a female householder with no husband present, and 36.9% were non-families. 32.8% of all households were made up of individuals and 15.5% had someone living alone who was 65 years of age or older. The average household size was 2.30 and the average family size was 2.92.
In the city the population was spread out with 24.6% under the age of 18, 6.9% from 18 to 24, 25.8% from 25 to 44, 23.9% from 45 to 64, and 18.8% who were 65 years of age or older. The median age was 40 years. For every 100 females there were 85.1 males. For every 100 females age 18 and over, there were 81.6 males.
The median income for a household in the city was $36,224, and the median income for a family was $44,652. Males had a median income of $30,746 versus $21,357 for females. The per capita income for the city was $18,661. About 5.3% of families and 6.6% of the population were below the poverty line, including 2.9% of those under age 18 and 12.6% of those age 65 or over.