The Pale Baywing is distributed in north east Brazil. See the distribution map at Birdlife International. It is normally found in dry, scrubby open woodland such as the caatinga of north east Brazil. They are often seen in small flocks.

Unlike other cowbirds it is not a brood parasite and, in fact, the Pale Baywing itself is a victim of brood parasitism by other cowbirds mainly the Shiny Cowbird Molothrus bonariensis. While the Pale Baywing breeds normally and sometimes builds its own nest, it often uses old nests of other species such as the Rufous-fronted Thornbird Phacellodomus rufifrons. This "nest parasitism" has been interpreted as a primitive stage of parasitism.