[5] Glaucidium is the diminutive form of the Greek word "glaux" (γλαύξ), meaning "little owl"; and the species name nubicola is Latin for "cloud-inhabiting".

[5] It has two nape patches, in the form of two spots of dark feathers edged in white; these resemble eyes and are called "false eyespots".

The "false eyespots" presumably fool larger predators and perhaps smaller mobbing birds into thinking that the owl is aware of their presence.

In contrast with the similar Costa Rican pygmy owl, its "false eyespots" are bordered with white in all non-rufous individuals.

[5] The song of the cloud-forest pygmy owl is composed of simple notes best expressed as hollow whistles or toots, like almost all New World Glaucidium species.

[3][13] Juan F. Freile and Diego F. Castro have proposed that current distribution of the cloud-forest pygmy owl is continuous from northern to southern Cotopaxi, and along the Pacific slope in Azuay, El Oro and Loja.

[13] This pygmy owl inhabits primary or slightly altered cloud forests in mountainous regions of high rainfall and steep slopes.

[4] Nevertheless, owing to its small size and retiring habits — generally being perched in dense evergreen trees — it is not often noticed.

This fact allows it to have chicks leaving the nest when there are large quantities of prey in the form of small birds' fledglings.

[11] The cloud-forest pygmy owl is an ambush predator, hunting its prey almost entirely during the daytime, probably watching from a perch before dropping or gliding down on its victim.

[7] This species takes a wide range of prey, mainly insects like grasshoppers, crickets, cicadas or bugs; but also small vertebrates like birds and lizards.

[7] A team of researchers opportunistically captured and banded an adult in 2008 during a long term study in Reserva Las Tangaras, near Mindo, Pichincha Province, Ecuador.

[16] The species is currently classified as vulnerable globally because it is suspected to be undergoing a rapid population decline within its naturally small distribution range, owing to severe ongoing deforestation.

[1] The rapid expansion of the road network in the Chocó, along with infrastructural improvement, are resulting in increased access to previously remote areas.

Additionally, intensive agricultural development (especially coca plantations) and cattle farming pose a serious threat to cloud-forest pygmy owl populations.