Gwadar is located on the Gulf of Oman close to the entrance of the Persian Gulf, about 460 kilometres west of Karachi. In 1993, Pakistan started feasibility studies for the development of a major deepwater seaport at Gwadar. The port project commenced on 22 March 2002 with the first phase completed in December 2005.

The construction of the port has spurred other major infrastructure projects in the area. This includes the 700 km Makran Coastal Highway which is now complete. The road links Karachi with several ports along the coast including Ormara, Pasni, Gwadar and will be extended to the Iranian border in the future. The highway has reduced travel time to Karachi from 48 hours to only 7 hours. Other road projects include the Gwadar-Quetta-Chaman road which is due for completion in 2006 and a roadlink to the town of Khuzdar in eastern Balochistan. There are also plans for a terminal for passenger ships.

The Civil Aviation Authority of Pakistan has earmarked 3000 acres (12 km²) of land for Gwadar International Airport which will be built 26 km away to the northeast of the existing airport towards Pasni and is likely to cost between $200-250 million. The new airport will be given international status and operate under the open sky policy. In the meantime there are plans to improve facilities at the existing airport.

Railway Minister Sheikh Rashid Ahmad has said,“The government is focusing on laying the Havelian-Kashghar (China) and Quetta-Kandahar (Afghanistan) railway tracks”.In 2006, Ministry of Railways announced that Gwadar will be connected to Pakistan Railways network at a cost of $ 1.25 billion (Rs. 75-billion).

Gwadar is located on the southwestern coast of Pakistan, close to the important Straits of Hormuz, through which more than 13 million bbd of oil passes. It is strategically located between three increasingly important regions of the world: the oil-rich Middle East, heavily populated South Asia and the economically emerging and resource-rich Central Asia.

The construction of the Gwadar deep-sea port is just one component of a larger development plan which includes building a network of roads connecting Gwadar with the rest of Pakistan, such as the 650 km Coastal Highway to Karachi and the Gwadar-Turbat road (188 km). This network of roads connects with China through the Indus Highway. Pakistan, China, Kazakhistan, Kyrgizstan and Uzbekistan are developing extensive road and rail links from Central Asia and the Chinese province of Xinjiang to the Arabian Sea coast.

The Government has initiated several projects, with majority financial and technical assistance from China, to develop Gwadar's strategic location as a goods transit and trade point. The primary project is the construction of a deep-sea port at Gwadar to enable high-volume cargo movement to and from the landlocked Central Asian states. The new port will also encompass conversion facilities to allow for the movement of natural gas as a part of plans for a termination point for the Turkmenistan-Afghanistan-Pakistan natural gas pipeline. The secondary project is a coastal highway connecting Gwadar to Karachi, whose $200 million cost will be completely financed by the Chinese. Gwadar will serve as a port of entry for oil and gas to be transported by land to the western regions of China. China has been promised sovereign guarantees for use of the ports.

The significance of Gwadar is great to both Pakistan and China. Pakistan will be able to have a strategic depth southwest from its naval base in Karachi that has long been vulnerable to blockade by the Indian Navy. There have been many reports that China, with permission from Pakistan, will also be able to dock naval ships in or around Gwadar. This has caused much concern by both the United States and India as both of these nations do not wish to see a Chinese naval presence in the Indian Ocean.