Freiberg's Peacock is endemic to the southern part of Lake Malawi with populations known from Boadzulu Island, Cape Maclear, Domwe Island, Hongi Island, Mara Rocks, Monkey Bay, Mumbo Island, Nankumba, Nkhudzi, Otter Point, and Undu Reef. It belongs to the Peacock group of cichlids and is found in the intermediate zone, where rocky shores give way to wide expanses of sand. Unusually, it shows a preference for rocky caves, which is in contrast to many other Aulonocara species that prefer an open expanse of sand in which they can forage for sand-dwelling invertebrates.