Half-butt eucalypts (genera: Eucalyptus and Corymbia) have both thick outer bark at the stem base (half-butt) conferring resistance to surface fire, and thin photosynthetic canopy bark that reduces moisture stress. Here we examine how the functional ecology of dual outer bark types influences the wide distribution of Australian half-butt species. We evaluate the proposition that half-butts should predominate in semi-arid environments prone to surface fires. We measured the bark thickness, butt height relative to flame/fire char height and tree height, height of first branch, and the location and prevalence of epicormic resprouting of co-occurring Eucalyptus miniata (half-butt) and E. tetrodonta (fibrous bark only) individuals, across 15 sites with contrasting fire frequencies (2000–2015) in the Darwin region. Total tree height was compared with butt height for all E. miniata individuals. The survival of half-butt and other eucalypt species, as well as non-eucalypts, was investigated at three sites affected by intense gamba grass (Andropogon gayanus) fire. The proportion of half-butt species in each of Australia’s 85 bioregions was calculated from geographic distribution records of 618 eucalypt species. Mean annual fire frequency (1997–2010), fire type (crown or surface fires) and climate in each bioregion was determined from satellite-derived records. Butt height at a site, including gamba grass sites, was not induced by flame height or affected by fire frequency and was approximately half the canopy height of the tree, suggesting it is internally regulated. The half-butt E. miniata and full-bark eucalypts were similarly resilient (survival) under surface fire conditions. Half-butt species predominated in arid and semi-arid bioregions characterised by surface fire, consistent with our proposition that half-butt bark is an adaptation to surface fire, and thin photosynthetic outer canopy bark reduces moisture stress, accounting for the wide distribution of half-butt eucalypts in arid and seasonally dry regions of Australia.