The red velvetfish was first formally described in 1855 by the Dutch physician, herpetologist and ichthyologist Pieter Bleeker with the type locality given as the Derwent River near Hobart in Tasmania.

[6] A recent study placed the genus Gnathanacanthus into an expanded stonefish clade, the Synanceiidae, because all of these fish have a lachrymal sabre that can project a switch-blade-like mechanism out from underneath their eye.

[9] The red velvetfish has a highly compressed body that lacks scales but has a covering of papillae which give the skin the a texture like velvet.

They are found within kelp and other seaweeds on protected rock reefs, frequently living deep within caves and crevices at depths down to 55 m (180 ft).

[11] Red velvetfish sway back and forth with the swell in a similar manner to the kelp fronds they live among, enhancing their camouflage and making the difficult to detect.