The species is found in upland plains and hills from about 2,500–5,200 m (Clark et al. 2008); however, the preponderance of Tibetan Fox habitat is >3,000 m, and the majority of that > 4,000 m. Most of its habitat consists of sparse grasslands devoid of trees and shrubs (Wang et al. 2007; although see also Gong and Hu 2003), particularly where Black-lipped Pikas are abundant. It appears that Tibetan Foxes are closely tied to the presence of pikas, and may in fact be an obligate predator (Harris et al. in press). Tibetan Foxes appear particularly adept at capturing pikas (including, at times, following brown bears Ursus arctos excavating pika burrows in order to capture pikas that escape; Harris et al. 2008), and are rarely encountered where pikas are absent. They also feed on carrion, and other small mammals (Zheng 1985). Tibetan Foxes spend considerable time resting in small burrows, hollows and rock crevasses (Wang et al. 2003). They are most active at dawn and dusk, although can be seen at any time of the day (Wang et al. 2004).

Widespread in the steppes and semi-deserts of the Tibetan Plateau from the Ladakh area of India, east across China including parts of the Xinjiang, Gansu, Qinghai, and Sichuan provinces and all of the Tibet Autonomous Region, and into Yunnan (Gong and Hu 2003, Wang 2003, Namgail and Bagchi 2005, Clark et al. 2008, Wozencraft 2008, Jnawali et al. 2011). Also present in Nepal north of the Himalaya, known specifically from the Mustang area (Schaller and Ginsberg 2004). There are no confirmed records for Bhutan.

Not listed on the CITES Appendices.
The species is legally protected in several large Chinese reserves, including Arjin Shan (45,000 km²), Xianza (40,000 km²), Chang Tang (ca. 334,000 km²), Kekexili (ca. 45,000 km²), and Sanjiangyuan (ca. 152,000 km²) (Schaller and Ginsberg 2004). However, actual protection remains minimal. Likely to occur in other protected areas throughout the species' range. The species is not known to be held in any formal conservation breeding programme, although some animals may be held in a few zoos.

Despite recent studies that have helped further understanding of the species' biology, very little remains known of their natural history.