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The island is part of the Vanuatu rain forests ecoregion, within the East Melanesian Islands biogeographic region. Dense evergreen forest covers nearly three-quarters of the island on the windward (eastern) side, while a combination of grassland and woodland occupies the north-west. Cloud forests exist at higher elevations. Much of the vegetation on the island is secondary growth.

Formerly it was known as a source of sandalwood in the 19th century, and much of it was depleted. It is also home to the kauri and tamanu trees. There has been extensive logging, but most of the area is recovering, and efforts are underway to try to make the industry sustainable. With European Union support, there is a protected Happy Lands Kauri Reserve.

Erromango, like most other islands of the Vanuatu archipelago, is volcanic in origin formed during a prolonged period of volcanic activity. The island is an ancient underwater volcano that has been raised 100-300m above sea level by tectonic uplift, forming a plateau on which stand three sets of eroded volcanic cones in the centre, north and east of the island.