According to the United States Census Bureau, the city has a total area of 21.5 square miles (55.8 kmē), of which, 14.4 square miles (37.4 kmē) of it is land and 7.1 square miles (18.4 kmē) of it (32.93%) is water. As of the census of 2000, there were 2,830 people, 917 households, and 555 families residing in the city. The population density was 196.0 people per square mile (75.7/kmē).

Seward is unique among most small Alaskan communities in that it has road access in the Seward Highway, a National Scenic Byway and All-American Road, which also brings it bus service, albeit most buses are marketed towards tourists and the costs are higher and service decreases or ceases in the winter. Seward Airport (PAWD/SWD) is home to (general aviation) services and flight-seeing operators.The median income for a household in the city was $44,306, and the median income for a family was $54,904. Males had a median income of $36,900 versus $30,508 for females. The per capita income for the city was $20,360. About 8.3% of families and 10.6% of the population were below the poverty line, including 12.7% of those under age 18 and 7.9% of those age 65 or over.