Found in montane forests of New South Wales, Australia, it grows on tree bark and occasionally on ferns at elevations between 1200 and 1450 metres.

The type specimen was collected by Leif Tibell from New South Wales, Australia, within New England National Park along the Lyrebird Walk, at an elevation of 1,250–1,450 m (4,100–4,760 ft).

The lichen's upper surface is smooth and varies in color: fresh specimens are likely whitish-grey when dry, but they may turn yellowish-brown over time, particularly in herbarium storage.

These isidia begin as tiny, round structures around 0.1 mm in diameter but can grow into branching, coral-like masses that may cover large portions of the thallus.

Cephalodia are small, globular structures that contain cyanobacteria and play a role in nitrogen fixation, a process crucial for nutrient cycling in the lichen's environment.

While both species share similarities in their thallus texture and apothecia structure, P. isidiosa is distinguished by its longer, lemon-shaped (citriform) spores with verrucose perispores, as well as its unique chemical profile.

[2] Pannaria isidiosa is found in montane forests of New South Wales, Australia, and has been recorded in two distinct areas separated by 400–500 km along the Great Dividing Range.