Rainbow Falls sits within Macquarie Pass National Park in the Illawarra region of New South Wales, where the Macquarie Rivulet plunges roughly eight metres down a narrow chute into a tight canyon.

Just above the drop, the river splits around a small cluster of boulders and trees before converging again and funnelling into the gorge below. There is no trail access to the base of the falls, though the canyon is popular with canyoners and abseilers.

The most direct approach follows the Clover Hill Trail, an old logging route off the Illawarra Highway. The return walk is approximately six kilometres and rated easy, typically taking one to two hours.

Along the way the track passes through dense forest before opening onto the cleared hilltop paddocks of Clover Hill, with views up to the sandstone escarpment. Three smaller falls on the Macquarie Rivulet can also be visited upstream.