[2] The eared pygmy tyrant has two subspecies, the nominate M. a. auricularis (Vieillot, 1818) and M. a. cinereicollis (Wied-Neuwied, M, 1831).

[2] The Clements taxonomy includes a potential third subspecies, "Eared Pygmy-Tyrant (Pernambuco)", as "Myiornis auricularis [undescribed form]".

The eared pygmy tyrant landed in Myiornis, which several authors have suggested should be merged into genus Hemitriccus.

It is found in eastern Brazil in southeastern Bahia, Minas Gerais, and Espírito Santo.

The nominate subspecies is found in southeastern Brazil between Mato Grosso do Sul and Rio de Janeiro state and south to northern Rio Grande do Sul, and through eastern Paraguay into northeastern Argentina's Misiones Province.

It mostly forages in the vegetation's lower and middle levels up to about 3 m (10 ft) above the ground, taking prey using short upward sallies from a perch to grab it from leaves.

[9] The eared pygmy tyrant's breeding season has not been fully defined but includes October to December.

Its nest is a "purse" with a side entrance, made from twigs and dry leaves and sometimes has a dangling "tail".

"Although much suitable habitat for this species has been destroyed or heavily degraded, it still occurs in many national parks and other protected areas throughout its range.