According to "National Geographic" magazine, the natural habitat of the three-toed sloth is the rainforests of Central and South America. Their range extends from southern Mexico to central Brazil, though they are most heavily concentrated along the Atlantic coast in Venezuela, Guiana, Suriname and French Guiana.
BBC explains that three-toed sloths live in the branches of large rainforest trees. They rarely leave their nests above the ground, so the tree they inhabit has to provide food and shelter for most of their lives. National Geographic writes that a sloth rarely even leaves the tree for water, since it gets most of the moisture it needs from plants.