Red-billed Tyrannulet is resident on the eastern slopes of the Andes of Ecuador, Peru, and Bolivia. It occurs north in Ecuador to western Napo (Ridgely and Greenfield 2001a), and may occur farther north, into Colombia (Alvarez Alonso and Whitney 2001). It probably occurs along the entire length of the Andes of Peru, although there are few or no records in northernmost Peru (near the border with Ecuador) or in southernmost Peru (near the border with Bolivia) (Schulenberg et al. 2010). Red-billed Tyrannulet only recently was discovered in Bolivia, where it is documented from several sites in La Paz (Mayer 2000, Alvarez Alonso and Whitney 2001, Hosner et al. 2009).
The elevational range of Red-billed Tyrannulet in Peru is 550–1300 m (Schulenberg et al. 2010).