This species was thought to have a worldwide distribution but with the revision of the genus Onychoteuthis  in 2010, it is now accepted that Onychoteuthis banksii is restricted to the central and northern Atlantic and the Gulf of Mexico while a recently described species, Onychoteuthis horstkottei, is found in the Pacific Ocean. The type locality is the Gulf of Guinea.
The distribution of this species was previously thought to be universal, but after reexamination of the genus Onychoteuthis in 2010, it's now understood that Onychoteuthis banksii is actually restricted to a specific region, namely the central and northern Atlantic and the Gulf of Mexico. Conversely, a newly discovered species, Onychoteuthis horstkottei, inhabits a different oceanic area, the Pacific Ocean. The original location of this species was the Gulf of Guinea.