Eucalyptus vernicosa is endemic to Tasmania, and is only found in alpine regions in the west to southwest, including Cradle Mountain. It grows between 700m and 1350m above sea level, usually on peaty acid soils on top of quartzite or sandstone bedrock. It is usually found above the tree line, and can be a dominant component of alpine heath communities, along with Richea, Athrotaxis, and Orites. This habitat typically has high average rainfall varying from 1000mm to 2500mm per year, and very cold winters with continuous frosts and snow for several months. The harsh climate and nutritiously poor soils probably explain the small size and tough leaves.