The Arafura fantail (Rhipidura dryas), sometimes known as the wood fantail, inhabits the Lesser Sunda Islands, the northern coast of Australia from the Kimberley to the western side of the Cape York Peninsula, including subcoastally in the Top End of the Northern Territory, and southern New Guinea. It is similar to the rufous fantail, from which it has been split taxonomically but, apart from minor overlap in the eastern Moluccas, their geographic ranges are discrete. It is generally duller than the rufous fantail with the rufous colouration more restricted.
The species is typically found in mangroves and other coastal woodland, alongside primary and secondary low-level forest. The species tolerates a wide altitudinal range, from near sea level to around 2000 metres in the Timor part of its range.