The giant velvet worm occurs from sea level up to around 500m within a restricted range of 810km2 in the North-East of Tasmania near the town of Scamander.
Its range borders that of the blind velvet worm (Tasmanipatus anophthalmus) to which it is closely related.
The giant velvet worm spends most of its time within moist rotting eucalyptus logs. It is very rarely found outside this habitat and generally only then as larger adults.
As logs decompose they pass through various stages, from solid wood to material devoid of any structure. It is believed that the type of rot most suitable for giant velvet worm habitation is the clay-like ‘mudgut’ rot which is extremely wet, usually found at the centre of rotting logs and is a late-stage rot-form.
Giant velvet worms are found primarily within dry sclerophyll forest but also extend into wet sclerophyll forest and rainforest.