Most travellers use Te Anau as a jumping-off point to Milford Sound. Allow 2 hours to reach Milford Sound from Te Anau. There are lots of scenic stops along the way, but not much else, so stop at Fresh Choice for snacks and be sure to fill up your gas tank, as there is usually not petrol available in Milford Sound.
Cruise Te Anau - Relax on a boutique cruise to the South Fiord of Lake Te Anau. Join Peter, your personal Skipper/Guide, on a gentle bush/nature walk to discover the Hidden Lakes. 
Te Anau-Au Caves - A boat trip and guided tour into the Aurora Caves system by walking path and small boats within the cave itself where you will see thousands of glowworms. The caves are only accessible by boat, and Real Journeys operates a quality catamaran for a 30 minute cruise each way. You spend approximately 35 minutes underground, where you will see some spectacular underground waterfalls, some high ceilings, and many other interesting things with a professional guide. Suitable for everyone except infants. Be aware you will need to bend over considerably at the entrance, only 1 meter high for 3-4 meters. $63/adult, $20/child, although promotions often apply. Approximately 2 and 1/4 hours total. 
Lake Marian - Off the hollyford road on the way to milford lies one of the most beautiful places on earth.
Gordon Kane's art gallery - On the lakefront, paintings of the deer hunting glory days. 
Astronomy Fiordland. Night Sky Safaris. Fiordland may have one of the lowest levels of light pollution in the world for an unbelievable view of the night sky. Each guest gets their own binoculars during the safari, a maximum group size of 8 share a high powered telescope, and Richard uses a really cool star pointer. Highly informative and interesting, but dress warmly! $45/adult, $30/child. approx 1.5 hours. bookings essential. www.astronomyfiordland.co.nzedit
Any of the many tracks located in the area. Te Anau isn't called the walking capital of the world for no reason! The major tracks that can be started from the surrounding area include: Kepler Track, Routeburn Track and Milford Track.
Only a short walk from downtown, the Te Anau Wildlife Centre provides the unique opportunity to view some of New Zealand's rarest endangered birds. Be sure to see the Takahe, a large flightless bird with beautiful blue plumage and an enormous red beak. With only 225 Takahe left in New Zealand, this is perhaps your only opportunity to see this majestic bird.
Don't miss out on going to Milford Sound, taking a cruise, and enjoying the scenic wonderland. For once its probably better to take a bus, they don't rush it and you get good quality commentary.
Take a day walk somewhere - Lake Marrion for example. If you don't have gear you can hire it from Bev's Tramping Gear Hire.
Adventure sports! Kayaking, climbing, skydiving, jetboating + lots more is all in Te Anau.
Te Anau Library. Free internet. You can use their 5 computers for up to 30 minutes for free or you can use their wireless room for unlimited wireless access for free. Follow the rules and use the designated internet room; the librarians are grumpy! Open 9am-6pm most days, 11-2 Saturdays, 1-6 Mondays, closed Sunday.edit
Westray Horse Treks, 55 Ramparts Road, Te Anau, Southland, New Zealand, ☎ +64 (0)3 249 9079, . 9am, 1:00pm and 4:30pm. NZ$75. (-45.436697,167.770742)edit
Milford Track Guided Day Walk - Real Journeys, Real Journeys Visitor Centre, Lakefront Drive, Te Anau, ☎ +64 3 249 7416, . Combine a 1hr cruise of Lake Te Anau plus 4-5hrs easy walking of the first part of the famous track - view alpine scenery and ancient beech forests. Includes lunch and experienced nature guide.edit
La Toscana for pizza, pasta and both Italian & NZ wines.
Fresh Choice. Te Anau's main supermarket, also the best place to buy beer and wine. edit
Miles Better Pies and more, Main street, ☎ 03 249 9044, . 7:00am-3:00pm. Specialist pie shop that has a range of fresh pies as well as sandwiches, cake slices and other treats, and great coffee, all to take away.(-45.416854,167.712546)edit
The three main venues in Te Anau are "The Ranch", "The Moose" and Redcliff. In order of age groups most likely to be found at each location. Also there is a working mans club for the older generations.
The Redcliff, 12 Mokonui St. Serves food and drink. Warm atmosphere, cozy pub-feel and the rustic small-town kindly atmosphere you would expect in NZ. edit
During December and January, bookings are essential! While bed and breakfasts, hotels, and backpackers abound in Te Anau, they will fill up and the nearest accommodation could be as far away as Gore.
Rosie's backpackers. At the end of Tom Plato Drive
Barnyard Backpackers. Just outside the township overlooking deer farm and a mighty fine view of the sunset when nature treats you right. 
Davaar Country Holiday Home, 2615 SH 94, The Key, Te Anau, Mossburn Highway, ☎ +64 3 249-5838, . Davaar Country Holiday Home is a 4 bedroom holiday home set in a private garden with an expansive lawn on the main Queenstown - Milford Sound Highway just 20 minute’s drive east of Te Anau at "The Key".(-45.545455,167.926787)edit
State Highway 94, or the Milford Road leads to Milford Sound, 120 km away to the north. While Milford Sound is a major tourist attraction, the trip itself is just as spectacular and should not be rushed. There are several scenic stops along the route that provide unique views. With about 2,500 visitors a day travelling to Milford Sound at peak times it pays to get an early start, especially as parking space sometimes runs out in the (free) Milford carparks in the late morning.