The Ferruginous Pygmy Owl is distributed from Mexico through Central and South America as far as northern Argentina. See the distribution map at Birdlife International. It is found in a wide variety of habitats from primary forest to coastal scrub

It is active both day and night and is often mobbed by small birds. It flicks its tail when agitated.

Photos 6 and 7 from Honduras show the sub-species G. b. ridgwayi considered by some authorities to be a distinct species Ridgway's Pygmy-owl G. ridgwayi but not by the HBW and Birdlife International Checklist on the basis that the differences in vocalisation are very slight.