The species is ecologically significant for its role in nitrogen fixation and as a food source for various animals including reindeer and mountain goats.

While generally secure across its range, its abundance varies regionally, being common in many arctic and subarctic areas but rare or imperilled in some southern portions of its distribution.

Studies have revealed several key adaptations of N. arcticum to arctic conditions, including its reflective thallus surface that regulates light exposure and physiological mechanisms that enable photosynthesis during short summer seasons.

The lichen's southern distribution limits are determined primarily by biological factors, particularly gastropod grazing of nitrogen-rich cyanobacterial tissues, rather than by temperature tolerance.

Linnaeus derived the diagnostic phrase from his earlier Flora Svecica (1745), adding a single descriptive term, laevis (smooth).

[4] Howe's typification has priority, and specimen 1273.183, which bears numbers from both Species Plantarum and Flora Svecica, is regarded as the lectotype, serving as the generitype of Nephroma.

[6] Since its original description, the taxon has been proposed for inclusion in several genera throughout its taxonomic history, including Peltigera (Raeusch., 1797), Peltidea (Göran Wahlenberg, 1812), Parmelia (Linds., 1871), Nephromium (Johan Havaas, 1897), and Opisteria (Edvard Vainio, 1909).

These outgrowths represent a cyanobacterial form of the species that has been found in moist inland forests of British Columbia at lower elevations.

[10] In North America, N. arcticum is one of only two members of the genus Nephroma that contain green algae as their primary photobiont, the other being N. expallidum (alpine kidney lichen).

All other North American Nephroma species form symbioses exclusively with cyanobacteria, resulting in darker thalli that appear brown when moistened.

[21] The species has a primarily arctic range, occurring throughout northern Canada from Alaska to Newfoundland, with isolated populations extending into New England and Wyoming.

In Canada, it is abundant (S5) in British Columbia, Labrador, Quebec, and Yukon Territory, while being rare (S1) in Saskatchewan and imperiled (S2) in Nova Scotia and New Brunswick.

[11] In coastal Alaska, the species can be found growing on tree trunks, particularly those of Sitka spruce (Picea sitchensis) and Western hemlock (Tsuga heterophylla) in high-elevation forests.

[23] Nitrogen fixation by its cyanobacterial partner enables N. arcticum to outcompete neighbouring plants and colonise moss-covered rocks in nutrient-poor environments.

[12] Nephroma arcticum plays ecological roles in arctic and subarctic environments through its symbiotic relationships, nitrogen fixation in nutrient-poor soils, environmental adaptations, and interactions with diverse organisms.

[26] Nephroma arcticum hosts several lichenicolous fungi, including Everniicola flexispora, which creates bleached spots with dark rims.

[29] A 2013 study found that N. arcticum associates with unique Nostoc photobiont strains, unlike most other cyanolichens, suggesting specialised symbiotic relationships.

The study also found that photobiont association patterns can vary geographically even when both partners are present, suggesting that environmental factors may influence symbiont selection.

This reflective capability helps prevent the lichen from overheating and drying out during intense sunlight periods, allowing it to maintain photosynthesis throughout the brief arctic summer season.

[32] The lobes of Nephroma arcticum absorb and use light similarly to green leaves in vascular plants;[33] scientists have conducted several studies to understand how this lichen processes nitrogen.

The amount of nitrogen was similar in both old and new parts of the thallus, but N. arcticum put more resources into growing fungal tissue instead of producing chlorophyll compared to P. aphthosa.

[37] In a long-term study, thalli of N. arcticum were transplanted between a high-elevation alpine heath and a low-elevation subalpine mountain birch forest in northern Swedish Lapland and harvested after eight years.

[16] The slug species Arion fuscus grazes on the lichen, favouring nitrogen-rich cyanobacterial parts with fewer defensive compounds.

Cephalodia grazing may lead to nitrogen starvation and reduced thallus growth in southern areas where lichenivorous gastropods are more common.

[43] According to the ethnobotanist Wendell Hillman Oswalt, the lichen, after having been cooked in water, was fed "to a person in a weak condition to make him strong".