It is endemic to Brazil and only known from its type locality in Jaboticatubas, Serra do Cipó, Minas Gerais.

[3] The specific name deimaticus is derived from Greek deimos fror "fear" and refers to the defensive display of this frog, probably aimed at scaring predators.

[2] Common names Jaboticatubas dwarf frog and frightening foam froglet have been coined for it.

[2] When threatened, this species performs a "deimatic" display in which it swells up its body, lowers its head, and raises its rump, such that the two large inguinal glands resembling eye spots are exposed.

[2] Physalaemus deimaticus is terrestrial frog known from rocky areas at about 800 m (2,600 ft) above sea level.