The sun bear is native to the tropical forests of Southeast Asia; its range is bound by northeastern India to the north and extends south to Bangladesh, Myanmar, Thailand, Cambodia, Laos, and Vietnam to Brunei, Indonesia, and Malaysia to the south. Its presence in China was confirmed in 2017 when it was sighted in Yingjiang County of Yunnan Province. It is extinct in Singapore.
These bears dwell primarily in two main types of forests throughout their range - deciduous and seasonally evergreen forests to the north of the Isthmus of Kra, and nonseasonal evergreen forests in Indonesia and Malaysia. They are typically found at low altitudes, such as below 1,200 m (3,900 ft) in western Thailand and peninsular Malaysia, but this varies widely throughout the range; in India, larger numbers have been recorded at elevations up to 3,000 m (9,800 ft) than in low-lying areas, probably due to habitat loss at ground level. They occur in montane areas in northeast India, but may not extend farther north into the unfavourable and colder Himalayan region; their distribution might be restricted to the northwest due to competition with sloth bears. The sun bear is sympatric with the Asian black bear throughout the remaining areas in the mainland range featuring a mix of seasonal forest types, with monthly rainfall below 100 mm (3.9 in) for a long spell of 3–7 months. In mountainous areas, Asian black bears are more common than sun bears, probably due to scarcity of invertebrates on which to feed. The major habitats in southern Thailand and peninsular Malaysia are moist evergreen forests, with more or less unvarying climate and heavy rainfall throughout the year, and low-lying or montane dipterocarp forests. Mangroves may be inhabited, but usually only when they are close to preferred habitat types.
The sun bear tends to avoid heavily logged forests and areas close to human settlement. However, sun bears have been seen in farmlands, plantations and orchards, where they may be considered vermin. A survey in Lower Kinabatangan Segama Wetlands showed that sun bears were feared but were not common in oil palm plantations; Bornean bearded pigs, elephants and macaques were far more damaging to crops. Sun bears have been reported preying on poultry and livestock.
Fossil remains suggest its occurrence farther north during the Pleistocene; it may have occurred as far south as Java in the middle to Late Pleistocene. Fossils also known from the Middle Pleistocene of Thailand along with Stegodon, gaur, wild water buffalo, and other living and extinct mammals. Today, it has been eliminated from the majority of its erstwhile range, especially in Thailand; populations are declining in most of the range countries. It disappeared from Singapore during the 1800s and 1900s, possibly due to extensive deforestation. Sun bear populations appear to decrease in size northward from Sundaland, and numbers are especially low in the northern and western extremes of the range. This has possibly been the case since prehistoric times, and is not a result of human interference. The population density varies from 4.3 and 5.9 individuals/km2 (11 and 15 individuals/sq mi) in Khao Yai National Park to 26 individuals/km2 (67 individuals/sq mi) in the Harapan Rainforest in southern Sumatra.
