This large and colourful tanager is endemic to elfin forest, woodland and shrub in the Andean highlands of southern Colombia, Ecuador and northern Peru.

It is generally rare or uncommon, and is threatened by habitat loss.

The masked mountain tanager was formally described in 1934 by the American ornithologist Robert Thomas Moore from a specimen collected at the base of the Sangay volcano in Ecuador.

[3] The specific epithet was chosen to honour the ornithologist Alexander Wetmore.

[2] The species was subsequently placed in the genus Buthraupis but when a molecular phylogenetic study published in 2014 found Buthraupis was polyphyletic, the masked mountain tanager was returned to the resurrected genus Tephrophilus.