According to the United States Census Bureau, the CDP has a total area of 1.5 square miles (4.0 km²), of which, 1.5 square miles (3.9 km²) of it is land and 0.04 square miles (0.1 km²) of it (1.30%) is water.
Oceano's beach is the Oceano Dunes State Vehicular Recreation Area, a 1500 acre (6 km²) coastal sand dune. As the only state park in California where visitors may drive vehicles on the beach, tourists are attracted from throughout the United States. Activities on this beach include riding the sand dunes on all-terrain-vehicles, swimming, clamming, camping, surfing, surf fishing, hiking, and bird watching.
As of the census of 2000, there were 7,260 people, 2,447 households, and 1,722 families residing in the CDP. The population density was 4,774.4 people per square mile (1,844.1/km²). There were 2,762 housing units at an average density of 1,816.4/sq mi (701.6/km²). The racial makeup of the CDP was 68.73% White, 1.12% African American, 1.29% Native American, 1.80% Asian, 0.03% Pacific Islander, 21.78% from other races, and 5.25% from two or more races. Hispanic or Latino of any race were 44.63% of the population.
There were 2,447 households out of which 38.8% had children under the age of 18 living with them, 50.2% were married couples living together, 14.8% had a female householder with no husband present, and 29.6% were non-families. 23.0% of all households were made up of individuals and 9.2% had someone living alone who was 65 years of age or older. The average household size was 2.96 and the average family size was 3.50.
In the CDP the population was spread out with 29.5% under the age of 18, 10.2% from 18 to 24, 29.8% from 25 to 44, 20.1% from 45 to 64, and 10.4% who were 65 years of age or older. The median age was 32 years. For every 100 females there were 97.2 males. For every 100 females age 18 and over, there were 96.3 males.
The median income for a household in the CDP was $38,014, and the median income for a family was $39,254. Males had a median income of $28,180 versus $21,310 for females. The per capita income for the CDP was $16,561. About 14.1% of families and 16.3% of the population were below the poverty line, including 22.0% of those under age 18 and 6.2% of those age 65 or over.
In the state legislature Oceano is located in the 15th Senate District, represented by Republican Abel Maldonado, and in the 33rd Assembly District, represented by Republican Sam Blakeslee. Federally, Oceano is located in California's 23rd congressional district, which has a Cook PVI of D +9 and is represented by Democrat Lois Capps.