The zebra finch has the most extensive mainland distribution of the Australian estrilids, being found in about 75% of mainland Australia, as the subspecies Taeniopygia guttata castanotis. This subspecies is generally not found on the coasts, except for the arid western edge. As the subspecies T. g. guttata, it is distributed from the islands Lombok and Sumbawa in the Lesser Sundas east to Luang and Sermata, and south to Sumba, Sawu, Dao, Roti, Semau, and Timor.

The zebra finch (or at the very least, the subspecies T. g. castanotis) is generally found in more arid areas.The areas it chooses to occupy are close to water, and places where rain is concentrated after it falls. However, this is likely more related to the abundance of vegetation than the abundance of water as a resource in itself. Within these areas, it is found in grasslands with scattered trees and shrubs, and in open or grassy woodlands. It is also found in cultivated areas, such as rice fields It usually stays confined to the low coastal areas of the islands it inhabits, but it can move to elevations up to 2,300 metres (7,500 ft) to exploit expanding cultivation and grasslands.

Although zebra finch breeding, for example, is initiated by rainfall,Klaus Immelmann proposed that sustained heavy precipitation is detrimental to the zebra finch. This is supported by the observation that the nest does not shield the chicks or eggs from rain, and rainfall can sometimes result in clutches being abandoned. Furthermore, it is supported by Immelmann's finding that zebra finches left Wyndham after the first heavy rains in November 1959, but returned to breed in April. It is hypothesised that birds in parts of northern Australia migrate inland during the wet season from October to May, and return to the coastal regions during the dryer months.