The grey dwarf hamster is found in parts of Eastern Europe and Asia including Afghanistan, Armenia, Bulgaria, China, Iran, Iraq, Israel, Jordan, Kazakhstan, Lebanon, Moldova, Mongolia, Pakistan, Romania, Russia, Turkey, and Ukraine. It has been recorded from Greece but has not been seen there since about 1970. It mostly lives above and in the Pamir Mountains has been recorded at altitudes of up to . It originally inhabited dry grasslands, arid steppes and semi-deserts, but it has spread into cultivated land and gardens, and even sometimes into buildings. It avoids moist locations, dense woodland and forests and is most common in sparsely-vegetated areas.