The Aztec Parakeet is distributed on the Caribbean slope of Central America from north-eastern Mexico to western Panama. See the distribution map at xeno-canto. It is found in forest and forest edges as well as open areas with scattered trees.

Many authorities including Clements and eBird lump Aztec Parakeet with Jamaican Parakeet E. nana with the English name Olive-throated Parakeet Eupsittula nana. In 2014 the HBW and Birdlife Checklist split the species on the basis that the Aztec Parakeet is a lighter brown on the underparts with lighter and less extensive blue on the flight feathers and is smaller in size.