The fan or funnel shaped fruit bodies are up to 30 cm (12 in) across, with cream-coloured caps overlain with shades of orange, brown, purple, or bluish-black.

The white or cream gills run down the length of the stipe, which is up to 8 cm (3 in) long and tapers in thickness to the base.

The fungus is both saprotrophic and parasitic, and its fruit bodies are generally found growing in overlapping clusters on a wide variety of dead or dying trees.

Unlike oyster mushrooms, O. nidiformis is poisonous; while not lethal, its consumption leads to severe cramps and vomiting.

[2] Material was originally collected by Scottish naturalist James Drummond in 1841 on Banksia wood along the Swan River.

"[3] More material collected from near the base of a "sickly but living" shrub (Grevillea drummondii) was named as Agaricus lampas by Berkeley.

[8] Investigating the species in 1994, Orson K. Miller, Jr. gave the ghost fungus its current binomial name when he transferred it to the genus Omphalotus with other bioluminescent mushrooms.

[3] On the Springbrook Plateau in southeastern Queensland, the local Kombumerri people believed the lights to be ancestors and gave the area a wide berth out of respect.

A 2004 molecular study shows the ghost fungus to be most closely related to the western jack o'lantern mushroom (O. olivascens), which is abundant in Southern and Central California.

However, some strongly luminescent wholly brown-coloured mushrooms were recorded, and laboratory experiments showed all interbred freely and produced fertile offspring, leading Miller to conclude that these were phenotypic variants of a single taxon.

[12] The cap is very variable in colour, sometimes cream though often tinted with orange, brownish, greyish, purple or even bluish-black shades.

Although the intensity of the luminescence is variable,[20] William Henry Harvey once reported that it was bright enough to read a watch face by.

[19] Confusion with another edible lookalike, Pleurotus ostreatus, common in the Northern Hemisphere and cultivated commercially, has been the source for at least one case of poisoning reported in the literature.

[24] In the southeast of the continent, it is found from eastern South Australia, where it has been recorded from Mount Gambier and the Fleurieu Peninsula, the Mount Lofty Ranges around Adelaide, the Murraylands, and north to the Flinders Ranges and from Lincoln National Park at the apex of the Eyre Peninsula,[25] through to southeast Queensland.

[29] O. nidiformis has been implicated in the heartwood rot of several species of eucalypt around Australia, including marri (Corymbia calophylla) in southwest Western Australia, in spotted gum (C. maculata) and messmate (Eucalyptus obliqua) in New South Wales, and in blackbutt (E. pilularis), Sydney blue gum (E. saligna), red stringybark (E. macrorhyncha) and Forth River peppermint (E. radiata) in Victoria.

[31] The US Department of Agriculture considers there is a moderate to high risk of O. nidiformis being accidentally introduced to the United States in untreated eucalyptus woodchips from Australia.

[32] Nearly a century ago, Cleland and Edwin Cheel suggested that even though the fungus was of "no great economic importance", "it would be advisable to destroy it by burning wherever found.

and thorny cricket), as well as giant rainforest snails (Hedleyella falconeri) and red triangle slugs (Triboniophorus graeffei), which voraciously consume the fungus.

[41] Fruit body extracts have antioxidant and free radical scavenging properties, which may be attributed to the presence of phenolic compounds.