The fruit bodies, or mushrooms, of the fungus grow on dead twigs and other woody debris of forest floors, especially along streams and other wet places.

As the cap expands, a narrow sterile (i.e., without any reproductive cells typical of the hymenium) band which frequently becomes lobed or irregularly-jagged often forms at the extreme margin.

The surface is densely white-pruinose initially, but soon becomes naked with a subsequent color shift to orange-yellow or lemon yellow.

The cheilocystidium and pleurocystidia (cystidia found on the edge and face, respectively, of a gill) are similar, club-shaped to spindle-shaped or egg-shaped, and have apices that are often covered with a resinous secretion.

The hyphae of the cortical layer of the stem are smooth and not embedded in gelatinous matter, and in European collections the basidia are two-spored and do not have clamps.

The fruit bodies of Mycena acicula grow singly, in groups, or somewhat clustered on debris in wet places, especially along streams or the borders of swamps.

The appearance of the fruit bodies is not significantly influenced by the effect of rainfall, perhaps because "such minute fungi are largely determined by the microenvironment prevailing under dense vegetation, etc., which is no doubt less affected by recent rain than more exposed situations.

"[14] The fungus is widely distributed throughout the eastern United States and Canada and occurs in Washington, Oregon, and California along the Pacific Coast.

[11] It has also been reported from Trinidad,[15] Britain,[16] Norway,[7] Spain,[17] Korea,[18] and the Ussuri River Valley in the northeast of China.