Happy Valley is an unincorporated community and census-designated place in Eddy County, New Mexico, United States. As of the 2020 census, Happy Valley had a population of 617. The community is located on the western edge of Carlsbad; New Mexico State Road 524 passes through the area. The town was settled as a farming community before potash was manufactured here. It was named because the lack of land use regulations made residents happy.
The community is approximately two miles west of the west edge of Carlsbad. According to the U.S. Census Bureau, the community has an area of , of which are land and are water.
It is within the Carlsbad Municipal School District, which operates Carlsbad High School.