First described by Scottish naturalist Robert Brown in 1830, Banksia caleyi was named in honour of the English botanist George Caley.

Found south and east of the Stirling Ranges through to the vicinity of Jerramungup, Banksia caleyi grows in a habitat marked by periodic bushfires.

In contrast to most other Western Australian banksias, it appears to have some resistance to dieback from the soil-borne water mould Phytophthora cinnamomi, and is comparatively easy to grow in cultivation.

Banksia caleyi grows as a many-branched bushy shrub to 2 m (7 ft) in height, with crumbly grey bark.

The flowers are cream at the base and deep pink to red in the upper half, and are brightest before anthesis and then gradually fade with age.

[3] Robert Brown formally described Banksia caleyi in his 1830 work Supplementum primum Prodromi florae Novae Hollandiae,[6] naming it in honour of the English botanist George Caley.

The type specimen was collected by William Baxter, inland from King George Sound on Western Australia's south coast, in 1829.

[7] Carl Meissner placed B. caleyi in series Quercinae in his 1856 arrangement of the genus on account of its strongly dentate, cuneate to obovate leaves.

[3] In 1996, Kevin Thiele and Pauline Ladiges published the results of a cladistic analysis of morphological characters of Banksia.

Tetragonae was found to be monophyletic, and therefore retained; and their analysis of the relationships within the series supported the placement of B. caleyi alongside B. aculeata.

Under George's 1999 arrangement, B. caleyi's placement was as follows:[5] Since 1998, Austin Mast has been publishing results of ongoing cladistic analyses of DNA sequence data for the subtribe Banksiinae.

His analyses suggest a phylogeny that is rather different from previous taxonomic arrangements, but support the placement of B. aculeata alongside B. caleyi in a clade corresponding closely with B. ser.

[17] Banksia caleyi is found near the southern coast of Western Australia, from South Stirling to the West River and northeast to Pingrup.

[4] Often locally abundant,[3] it is found in mallee woodland on white sand, gravel, and sandy clay, generally on flat or slightly undulating land.

[2] Like many plants in south-west Western Australia, Banksia caleyi is adapted to an environment in which bushfire events are relatively frequent.

[21] The upside-down flower spikes drip nectar onto the ground or lower leaves, suggesting pollination by nonflying mammals which are attracted to the scent.

[3] Furthermore, the individual flower structure is similar to Banksia attenuata, for which the honey possum (Tarsipes rostratus) is a major pollinator.