The story of The Dispossessed is set on Anarres and Urras, the twin inhabited worlds of Tau Ceti. Cetians are mentioned in other Ekumen novels and short stories. An Anarresti appears in the short story The Shobies' Story. Urras before the settlement of Anarres is the setting for the short story The Day Before the Revolution.
In The Dispossessed, Urras is divided into several states which are dominated by the two largest ones, which are rivals. In a clear allusion to the United States (represented by A-Io) and the Soviet Union (represented by Thu), one has a capitalist economy and patriarchal system and the other is an authoritarian system that claims to rule in the name of the proletariat. Further developing the analogy, there is in A-Io an oppositional left-wing party which is closely linked to and supporting the rival Thu, as were Communist parties in the US and other Western countries at the time of writing. Beyond that, there is a third major, though underdeveloped, area called Benbili — when a revolution breaks out there, A-Io and Thu invade Benbili generating a proxy war. Thus, Benbili comes to represent south-east Asia, an allusion to the Vietnam War.
In the last chapter of The Dispossessed, we learn that the Hainish people arrived at Tau Ceti 60 years ago, which is more than 150 years after the secession of the Odonians from Urras and their exodus to Anarres. Terrans are also there, and the novel occurs some time in the future. A date of 2300 has been suggested, while the complexities of Urrasti history hint otherwise.