The velvety free-tailed bat forages in open areas, above tree canopies, around forest edges, and around streams and ponds.

It occurs in the Americas from Argentina north to Cuba and Mexico and also the Florida Keys in the United States.

A velvety free-tailed bat has been observed being killed by a giant centipede (Scolopendra viridicornis) in the Amazon.

The lone bat had been roosting inside a man-made wooden structure in Cristalino State Park before the centipede grabbed it with its legs and injected venom into its neck.

This observation is notable due to the rarity of centipede predation on bats.