Tasmanian Thornbills as the name suggests are restricted to Tasmania, the Furneaux Group (Flinders Is) and King Island. They occur in rainforest and wetter habitats with a well developed shrub layer - wet gullies along creeks lined with tree ferns are a favourite. Their life history is not very well known - they are regarded as largely sedentary and live mainly as pairs in small territories when breeding but are seen in groups or even small flocks mixed with other species at other times.

Tasmanian Thornbills can be confused with Brown Thornbills in some areas where their territories adjoin or overlap. Brown Thornbills generally prefer drier, more open habitats. Tasmanian Thornbills have a disinctly smaller bill, less streaking on the breast, more rufous on the crown and whiter flanks and undertail coverts than Brown Thornbills. They also tend to cock their slightly longer tail more often. Their calls are quite similar.