Sikkim is situated in an ecological hotspot of the lower Himalayas, one of only three among the Ecoregions of India. The forested regions of the state exhibit a diverse range of fauna and flora. Owing to its altitudinal gradation, the state has a wide variety of plants, from tropical to temperate to alpine and tundra, and is perhaps one of the few regions to exhibit such a diversity within such a small area. Nearly 81% of the area of Sikkim comes under the administration of its forest department.

The flora of Sikkim include the rhododendron, the state tree, with a wide range of species occurring from subtropical to alpine regions.

Orchids, figs, laurel, bananas, sal trees and bamboo grow in the Himalayan subtropical broadleaf forests of the lower altitudes of Sikkim, which enjoy a subtropical-type climate.

In the temperate elevations above 1,500 metres (4,900 ft) are Eastern Himalayan broadleaf forests, where oaks, chestnuts, maples, birches, alders, and magnolias grow in large numbers, as well as Himalayan subtropical pine forests, dominated by Chir pine.

The alpine-type vegetation is typically found between an altitude of 3,500 to 5,000 metres (11,500 to 16,000 ft). In lower elevations are found juniper, pine, firs, cypresses and rhododendrons from the Eastern Himalayan subalpine conifer forests. Higher up are Eastern Himalayan alpine shrub and meadows, home to a broad variety of rhododendrons and wildflowers.

Sikkim has around 5,000 flowering plants, 515 rare orchids, 60 primula species, 36 rhododendron species, 11 oak varieties, 23 bamboo varieties, 16 conifer species, 362 types of ferns and ferns allies, 8 tree ferns, and over 424 medicinal plants. A variant of the Poinsettia, locally known as "Christmas Flower", can be found in abundance in the mountainous state. The orchid Dendrobium nobile is the official flower of Sikkim.

The fauna include the snow leopard, the musk deer, the Himalayan Tahr, the red panda, the Himalayan marmot, the serow, the goral, the barking deer, the common langur, the Himalayan Black Bear, the clouded leopard, the Marbled Cat, the leopard cat, the wild dog, the Tibetan wolf, the hog badger, the binturong, the jungle cat and the civet cat. Among the animals more commonly found in the alpine zone are yaks, mainly reared for their milk, meat, and as a beast of burden.

The avifauna of Sikkim consist of the Impeyan pheasant, the crimson horned pheasant, the snow partridge, the snow cock, the lammergeyer and griffon vultures, as well as golden eagles, quail, plovers, woodcock, sandpipers, pigeons, Old World flycatchers, babblers and robins. Sikkim has more than 550 species of birds, some of which have been declared endangered.

Sikkim also has a rich diversity of arthropods, many of which remain unstudied even today. As with the rest of India, the most studied group is that of the butterflies. Of approximately 1438 butterfly species found in the Indian subcontinent, 695 have been recorded from Sikkim. These include the endangered Kaiser-i-hind, Yellow Gorgon and the Bhutan Glory.