Recognised based on phylogenetic studies that highlighted its unique genetic markers, P. castanea is distinguished by its dark, chestnut-coloured upper surface, which inspired its vernacular name, chestnut pelt lichen.

Its distinctive upper surface is chestnut-brown, turning pale bluish-grey when sheltered, and features granular soredia for vegetative reproduction, housed within irregularly shaped soralia.

These studies were based on DNA sequencing of the internal transcribed spacer region and the large subunit of the ribosomal RNA gene, demonstrating that P. castanea forms a distinct lineage and highlighting genetic variations unique to this species.

[1] Goward collected the type specimen of Peltigera castanea in British Columbia's Clearwater River Basin, near Philip Creek along the Battle Mountain Road at an elevation of about 1,500 m (4,900 ft) on 1 October 2001.

The complex itself is part of a larger grouping of lichens that have been difficult to categorize due to their overlapping morphological traits and the subtleties in chemical and genetic distinctions.

[3] The individual lobes comprising the thallus are stiff, fragile, and not much longer than they are wide, with a strong concavity or sometimes flat appearance, featuring loosely overlapping and irregularly branched patterns.

[1] Close in resemblance, Peltigera extenuata has flatter lobes with a duller, densely tomentose and minutely scabrid (crusty and rough) upper cortex that varies in colour from bluish grey to purplish brown when exposed to sunlight.

[1] Peltigera ulcerata is distinguished from P. castanea by its shiny upper surface, which remains non-tomentose, including at the margins of the lobes, and by its generally elongated soralia.

[1] Peltigera castanea predominantly inhabits mountainous forests and alpine heaths, typically growing in open, south-facing outcrops with ideal microclimate conditions.

[3] In Estonian alvar communities, it is commonly found with mosses such as Abietinella abietina, Bryum argentatum, Ceratodon purpureus, and Tortula ruralis, sharing its habitat with several rare, ground-dwelling lichens of arcto-alpine distribution.

[5] Originally known only from northwestern North America,[1] Peltigera castanea's range includes terricolous and muscicolous growth on rock outcrops from Alaska's Chilkoot Trail to Glacier Bay,[6] extending east to the Yukon and south to Alberta's Rocky Mountains.

[3] Subsequent research has revealed its presence as far northeast as Greenland and even the Antarctic Peninsula, marking the species' adaptability to a wide range of cold environments.

[5][8] In 2023, the species was documented in Mount Xiaowutai, Hebei, China,[9] and its 2020 discovery on James Ross Island in the Antarctic Peninsula marked the first record of the lichen in the Southern Hemisphere.