The lichen is widely distributed in the southeastern United States; in 1954 the north border of its distribution was given as a line passing through southern Louisiana, Mississippi, Alabama and Georgia.[20] Although the northern limit was extended to southern Delaware,[21] the author later revised his opinion, and the northern limit is thought to be North Carolina.[22] In North Carolina, it is found on Smith Island, a notable location because it represents the northern limit of the distribution of cabbage palmetto (Sabal palmetto). The presence of this 6 meter (20 ft) tree interspersed among the dominant tree species Quercus virginiana give the island a subtropical appearance—consistent with the lichen's preferred climate.[23]
Cryptothecia rubrocincta is also widespread in tropical and subtropical areas of the West Indies and Central and South America.[24][25] In South America in is found north of Chile and Argentina.[20][26] It is rarer in Africa, having only been collected from three geographically widely separated mountain regions: São Tomé and Príncipe, Tanzania, and DR Congo. The lichen may be found at altitudes ranging from sea level to 2,600 metres (8,500 ft) (in Colombia).[15]
The lichen typically grows on rough bark in sheltered and shaded habitats in moist and dense subtropical forests. More rarely, it is found on rocks or on leaves. In the USA it occurs in hammocks (hardwood forests) and swamps which have standing water, at least part of the year. It is also common in oak or oak-pine scrub vegetation. The species is often associated with Cryptothecia striata in the USA