The guanaco stands between 1.0 and 1.3 m (3 ft 3 in and 4 ft 3 in) at the shoulder, body length of 2.1 to 2.2 m (6 ft 11 in to 7 ft 3 in), and weighs 90 to 140 kg (200 to 310 lb).Its color varies very little (unlike the domestic llama),ranging from a light brown to dark cinnamon and shading to white underneath. Guanacos have grey faces and small, straight ears.

Guanaco is one of the largest terrestrial mammals native to today's South America. Other terrestrial mammalian megafauna to weigh similar to or exceed guanaco include the tapirs, the marsh deer, the white-tailed deer, the spectacled bear, and the jaguar.

The guanaco has thick skin on its neck, a trait also found in its domestic counterpart, the llama and in its relatives, the wild vicuña and domesticated alpaca. This protects its neck from predator attacks. Bolivians use the neck-skin of these animals to make shoes, flattening and pounding the skin to be used for the soles. In Chile, hunting is allowed only in Tierra del Fuego, where the only population not classified as endangered in the country resides.