The White-tailed Shrike-tyrant is distributed in the Andes from Ecuador through Peru and Bolivia to north-west Argentina. See the distribution map at Birdlife International. It is found in semi-arid scrub and páramo mainly between 3,500 and 4,500 metres though found a bit lower in Ecuador.

It is similar to Black-billed Shrike-tyrant A. montanus which also has a white tail but can be distinguished by its larger size, stouter bill with pronounced hook, more streaky throat and darker iris.