It is considered a cleaner shrimp as eating parasites and dead tissue from fish makes up a large part of its diet.

[2][3] The species is a natural part of the coral reef ecosystem and is widespread across the tropics typically living at depths of 5–40 metres (16–131 ft).

[2] Lysmata amboinensis is popular in home and public aquaria where it is commonly referred to as the skunk cleaner shrimp; this is due to its striking colours, peaceful nature, and useful symbiotic cleaning relationship which can also be witnessed in captivity.

[2] Lysmata amboinesis have a pair of stalked eyes though experiments suggest they have coarse vision and are colour blind; this low spatial resolution makes it unlikely they can see the striking patterns of other shrimps or tropical fish.

[2] Lysmata amboinesis do not live in large groups, more often in pairs, and while omnivorous it is believed they derive much of their nutrition from cleaning parasites and dead tissue from fish.

[12] Additionally, cleaning services provided by the shrimp aid wound healing of injured fish supporting the symbiosis hypothesis.

[13] L. amboinesis is also commonly found living in caves with their client fish, such as moray eels, providing the shrimp with protection from predators.

[3][15][16] Many species of Lysmata, including L. amboinesis, are commonly kept in salt water aquaria; they are safe and beneficial since they will clean both the tank and fish but not harm corals.

The cycle from spawning to adult form takes approximately 6 months during which time the vast majority of larvae die.