The species is a preferred food source of reindeer and caribou during the winter months,[2][3][4] and it has an important role in regulating nutrient cycling and soil microbiological communities.

[5] Like many other lichens, Cladonia stellaris is used by humans directly for its chemical properties, as many of the secondary metabolites are antimicrobial (e.g., Usnic acid), but it also has the unique distinction of being harvested and sold as 'fake trees' for model train displays.

[7] The fungal portion of Cladonia stellaris, known as a mycobiont, protects the lichen from lichenivores, superfluous solar radiation, and other kinds of stressors in their ecosystem.

[8] Cladonia stellaris is described as mat-forming and fruticose (shrub-like) in appearance, and as terrestrial, terricolous, or epigeic, because it grows on the surface of bare soil or gravel.

Like most other lichens, Cladonia stellaris grows slowly, averaging less than 0.5 cm per year under good conditions.