It was discovered in 1985 in placers derived from serpentine, in association with another rare mineral khatyrkite (CuAl2).
Both minerals are thus far restricted to the area of the Iomrautvaam, in the Khatyrka ultramafic (silicon-poor) zone of the Koryak–Kamchatka fold area, Koryak Mountains, Anadyrsky District, Chukotka Autonomous Okrug, Far Eastern Federal District, Russia.
[2][3][4] Cupalite forms dendritic, rounded or irregular grains, typically below 0.1 millimeter in size, which are intergrown with khatyrkite.
[6] Cupalite and khatyrkite are accompanied by spinel, corundum, stishovite, augite, forsteritic olivine, diopsidic clinopyroxene and several Al-Cu-Fe metal alloy minerals.
They are remarkable by containing micrometre-sized grains of icosahedrite, a naturally occurring quasicrystal – aperiodic, yet ordered structure.