Karlobag is a village and a seaside municipality on the Adriatic coast in Croatia, located at the foot of the Velebit mountain, overlooking the is…Karlobag is a village and a seaside municipality on the Adriatic coast in Croatia, located at the foot of the Velebit mountain, overlooking the island of Pag, west of Gospić and south of Senj. The Gacka river also runs through the area.