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It is well adapted to the warm, dry summers and relatively wet, mild winters of southwest Oregon.

Incense-cedar is found on a variety of substrates from serpentine to granitic soils. It tolerates some shade and can regenerate on mineral soil or relatively thick layers of litter and duff. The species grows in mixed conifer forests in the foothills and mid-elevation in Oregon. There it becomes increasingly common in the Cascade Mountains, south into the Siskiyou and Klamath mountains, and through the Sierra Nevada of California to Baja, Mexico. Incense-cedar is a West Coast tree distributed in small populations on the east slopes of Mount Hood, south to the Santiam River. Oregon's incense-cedar is the only North America Calocedrus.

Libo refers to frankincense, an aromatic compound from a flowering tree that is not a conifer and is well known in Middle Eastern literature. Libocedrus is still used for ten other species in the Southern Hemisphere. Its new name, Calocedrus, is based on the Greek for beautiful cedar. The tree's former scientific name, Libocedrus decurrens, was changed based on anatomical studies of its cones. It was once the species of choice for wood pencils because of its straight grain and easy sharpening most of the world's wooden pencils are now manufactured from tropical hardwoods. Incense-cedar is especially drought tolerant it can close its leaf pores (stomata) to prevent water loss. Although it grows as a riparian (stream-side) tree or under other high moisture conditions, it is much more common in dry sites, where it is seldom a dominant species. Incense-cedar ( Calocedrus decurrens) tolerates a variety of ecological conditions.