Central Otavalo is compact and easily walked. The Plaza de los Ponchos and the main market area are within five minutes of most guesthouses. For the surrounding villages and lakes, several options are available.
Taxis and camionetas are cheap and plentiful. A shared camioneta (pickup truck) runs from the market area to Peguche for next to nothing; a private taxi to Laguna Cuicocha costs around $10–15. Drivers often wait at trailheads and can be arranged to return at a fixed time.
Buses connect Otavalo to Cotacachi, Ibarra, and the surrounding villages throughout the day. The bus terminal is two blocks from the central plaza.
Cycling is a rewarding way to explore the valley. Several outfitters in town rent bikes and organise guided rides around Laguna de San Pablo or down to the Intag Valley. The road around San Pablo lake is mostly flat; the descent into Intag is exhilarating but long.