Tinder fungus grows on trees throughout the temperate and boreal regions of the northern hemisphere, and is found in Europe, northern Asia and in North America. In the north of its range it occurs mostly on birch trees (Betula spp.), but in parts of Europe it is widespread on beech trees (Fagus sylvatica) and also grows on sycamore (Acer pseudoplatanus) and aspen (Populus tremula). In North America it is most common on birches, but also occurs on maples (Acer spp.), poplars (Populus spp.) and alders (Alnus spp.). It has been recorded from Pakistan, northern Iran and Turkey, where it grows on poplars (Populus spp.), while in northern Japan it grows on Japanese beech trees (Fagus crenata). Tinder fungus has also been found on the island of Dominica in the Caribbean.
Tinder fungus occurs in much of mainland Scotland, but is most abundant in the Highlands, because the birch trees (Betula pendular and Betula pubescens) that are its main host are so widespread there. It is absent from Orkney and the Outer Hebrides, but occurs on Mull and Skye, and has also been recorded on Colonsay. In Scotland it is rarely found on species other than birch, but occasionally is seen on beech (which is its main host in the south of England), alder and aspen.