It has an immersed thallus that slightly bleaches the bark it grows on, and tiny apothecia (fruiting bodies) that are densely covered with yellow to yellow-green pruina.

It is closely related to C. chrysophthalma, found in the temperate climates of the Northern Hemisphere, but differs primarily in its chemical composition.

The apothecia of the lichen are scattered, measuring 0.1–0.3 mm wide, convex to more or less spherical in shape, and typically densely covered with yellow to yellow-green pruina.

[2] Chrysothrix palaeophila contains vulpinic acid as a major secondary metabolite (lichen product), along with pulvinic dilactone in minor or trace amounts.

It is found in cool temperate rainforest or wet eucalypt forest, predominantly on ancient conifers such as Lagarostrobos franklinii and Athrotaxis selaginoides, as well as on Eucalyptus obliqua.