It is found in New Zealand waters particularly the Kermadec and Three Kings Islands, the northeastern part of the North Island of New Zealand, and the West coast of North America.

[1] Palmophyllum umbracola grows in the form of thalli attached to substrates such as rocks and algae.

The thalli are formed from spherical green cells in a gelatinous matrix.

Its habitat is subtidal on rock in shallow waters extending to more than 70 meters deep.

[2] The holotype is held at the Museum of New Zealand Te Papa Tongarewa.