Plentiful when European settlers arrived in New Zealand, its scientific description was published in 1845, but it was largely or completely extinct by 1914.

The laughing owl was originally described as Athene albifacies by George Robert Gray in 1844, based on a specimen from Waikouaiti, South Island.

In the South Island, the larger subspecies N. a. albifacies inhabited low rainfall districts, including Nelson, Canterbury, and Otago.

Some birds were more rufous, with a brown facial disk; this was at first attributed to subspecific differences, but is probably better related to individual variation.

Weight was around 600 g. The call of the laughing owl has been described as "a loud cry made up of a series of dismal shrieks frequently repeated".

[11] Laughing owls generally occupied rocky, low-rainfall areas and also were found in forest districts in the North Island.

Their diet was diverse, encompassing a wide range of prey items, from beetles and wētā up to birds and geckos of more than 250 g, and later on rats and mice.

Laughing owls were apparently ground feeders, chasing prey on foot in preference to hunting on the wing.

These pellets have been a great help to the palaeobiological concentrations of otherwise poorly preserved small bones: "Twenty-eight species of bird, a tuatara, three frogs, at least four geckos, a skink, two bats, and two fish contribute to the species diversity" found in a Gouland Downs roosting site's pellets.

Once Pacific rats were introduced to New Zealand and began to reduce the number of native prey items, the laughing owl was able to switch to eating them, instead.

[18] An unidentified bird was heard flying overhead and giving "a most unusual weird cry which might almost be described as maniacal" at Saddle Hill, Fiordland, in February 1952,[19] and laughing owl egg fragments were apparently found in Canterbury in 1960.

Until the late 20th century the species' disappearance was generally accepted to be due to competition by introduced predators for the kiore, or Pacific rat, a favorite prey of the laughing owl (an idea originally advanced by Walter Buller).