The Yellow-lored Tanager is distributed in the eastern Andes from the south of Colombia to central Bolivia. See the distribution map at Birdlife International. It is found in humid forest at between 400 and 1,350 metres.

This species is treated in different ways by different authorities. Birdlife International call it Yellow-lored Tanager Habia frenata; IOC calls it Olive Tanager Chlorothraupis frenata while Clements regards it as a subspecies of Carmiol's Tanager Chlorothraupis carmioli frenata. With its stout bill and chunky body one wonders if it is even a tanager.