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I do not remember the in-story locale of Lost Girl ever being mentioned in the show, it is filmed in Toronto however, and in many scenes notable landmarks (such as the CN tower) can be seen which are never mentioned in and do not play any part in the story.

In addition, various colloquialisms differentiate the show from many American written shows (such as not referring to the police station that Dyson and Tamsin are officers at as 'precincts'.

Do any of the characters ever make mention to where they're located, are the events in Lost Girl based in any real world city?

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In season 2 episode 18, "The Falls" are mentioned as the location of Bo & Ryan's almost-wedding, and in season 3 episode 5, Kenzi suggests she & Bo go to "the casino at Niagara". Various maps used on the show are of the Toronto area as well. So while they haven't yet specifically stated that "Faetown" is Toronto, they're leaving less and less doubt as time goes on.

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In one episode Kenzi does refer to a minor character being "across the border" where she is on death row. IIRC Canada doesn't have a death penalty so it's a sort of admission that they aren't in the US. But other than that, no, I don't believe any character ever specifically says Toronto.

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