Yellow-crested Tanager is mainly found in eastern Peru, northwestern Bolivia, and adjacent Amazonian Brazil (Clements et al. 2015). It occurs as far south as northwestern Cochabamba, Bolivia (MacLeod et al. 2005), and in Bolivia and southern Peru is confined to the base of the Andes Mountains (Isler and Isler 1987). It extends east as far as extreme western Brazil, and the Solimões River, Amazon River, and Marañon River form the northern boundary from near São Paulo de Olivença, Brazil, west to near San Lorenzo, Peru (Isler and Isler 1987, Wiley 2010). This area has been referred to as the South Amazon (Inambari) Center of avian endemism (Cracraft 1985). It appears to replace its allopatric sister species, the more widespread Flame-crested Tanager (T. cristatus), in this region, though the two are recorded sympatrically in extreme western Brazil (Ridgely and Tudor 1989).

Yellow-crested Tanager occurs from lowlands to 1400 m in Peru and 1650 m in Bolivia (Weske 1972, Isler and Isler 1987). Specific reports include: lowlands to 1130 m in the northern Cerros del Sira, Peru (Socolar et al. 2013); from 600-950 m in Serrania Sadiri, Parque Nacional Madidi, Bolivia (Hosner et al. 2009); and from 1800-2600 m in the yungas forests of Cochabamba, Bolivia (MacLeod et al. 2005). The center of elevational abundance is in the lower tropical zone (Parker et al. 1996). This species occurs in the Southern Amazonian Zoogeographical Region (Parker et al. 1996).

Yellow-crested Tanager is endemic to South America.

The primary habitat of Yellow-crested Tanager is tropical lowland evergreen forest, but it is uses secondary forests (Terborgh and Weske 1969, O'Neill and Pearson 1974, Parker et al. 1996, MacLeod et al. 2005, Guerrero 2010, Robbins et al. 2011). This species primarily occupies the upper canopy to subcanopy, though it also ranges down to the understory (Pearson 1971, O'Neill and Pearson 1974, Munn 1985, Isler and Isler 1987, Hayes and Sewlal 2004). More specifically, Yellow-crested Tanager is fairly common in humid terra firme and várzea forests, and less common at forest borders (Isler and Isler 1987, Ridgely and Tudor 1989, Robbins et al. 1991, Hilty 2011). It also is rare or uncommon in white sands habitat in Peru (O'Shea et al. 2015), rare in a tropical dry forest (O'Niell and Pearson 1974), uncommon in lower montane forests of Peru (Mee et al. 2002), and as average abundance to rare in coffee plantations in the Apurímac Valley, Peru (Terborgh and Weske 1969).

No historical changes in distribution have been reported. Due to Amazonian deforestation, however, Yellow-crested Tanager is expected to lose around 7% of suitable habitat over the next 11 years (Soares-Filho et al. 2006, BirdLife International 2016).

No information.