Thelymitra cyanea is widespread and often common in many parts of south-eastern Australia and New Zealand. It grows in damp to wet boggy places, mainly in montane and subalpine habitats. In New Zealand it is widespread on the North, South and Chatham Islands. In New South Wales it is found on the tablelands south from Ebor, in south-eastern Victoria and in Tasmania. In South Australia it is restricted to near Mount Compass.