The  lake is the largest lake in the southern part of Trøndelag county. Selbusjø is part of the Nea-Nidelv watershed, with the Nea River flowing into it on the eastern end and the Nidelva River flowing out the western end.
Selbusjø is a component of the Nea-Nidelv watershed in southern Trøndelag county. The lake is surrounded by the Nea River on its eastern edge, while the Nidelva River flows out to the west.