The Forest Kingfisher is distributed in northwestern Australia and in north-eastern Australia from Cape York to just north of Sydney, NSW. It is found in a variety of wooded habitats and it is often seen perched on a branch or wire ready to plunge down on its prey of caterpillars, grasshoppers, spiders and small reptiles.

The most common nest site is a burrow built into a tree termite nest and they have been observed flying at a termite nest head on to open up the hole which they then excavate using their bills as picks.