Hydroprogne caspia, commonly known as the Caspian Tern, has a wide geographical distribution across multiple continents. It is native to areas in North America, Europe, Africa, Asia, and Oceania. In North America, the species can be found from the Great Lakes down to the Gulf of Mexico, and along both the Pacific and Atlantic coasts. It is also present in parts of Europe, particularly around the Baltic Sea. In Africa, its range includes regions around the Mediterranean and the large lakes of eastern Africa. The Caspian Tern is also found across varied parts of Asia, including wetlands and coastal areas, and has a presence in Australia and New Zealand.

Caspian Terns typically inhabit coastal regions, including beaches, islands, estuaries, and marshes. They are also found around inland lakes, rivers, and reservoirs. The species prefers environments with abundant water sources as they rely on fish as their primary diet. The climate in these areas ranges from temperate to subtropical; however, the species is adaptable to different climatic conditions, depending on their geographical location.

As primarily piscivorous birds, Caspian Terns occupy a niche within both marine and freshwater ecosystems where they play a role in controlling fish populations. Their foraging behavior involves diving for fish from the air, and they often compete with other piscivorous bird species. The species is known to form breeding colonies on sandy or gravelly islands where they are safe from terrestrial predators, highlighting their adaptation to specific ecological niches within their broad geographic range.