Koznik is situated near the village of Kozica, southeast of Pljevlja. Relatively well-preserved remains of the fortification lie on a high, steep, rocky hill above the Kozica River .

Koznik was first mentioned in 1441, in the archive of Dubrovnik. As Castrum Koznik, the town was referred to in 1448 charter of Friedrich III addressed to Herceg Stjepan.

In the area of Kozica village, an iron mine was operating during the Middle Ages. The ore was of a good quality and its exploitation easy. Obviously, the existence of the mine conditioned the establishment of a town there.

We can say that Koznik is a typical example for adjusting a ground plan to the terrain and using to the maximum a natural shape of a rocky hill in order to make a town as inaccessible as possible. The ground plan is considerably elongated.

Fresh water springs can be found at the foot of the town.