It is found primarily in Colombia, Costa Rica, Ecuador, Panama, Peru, and Venezuela.

Adults of the nominate subspecies L. p. pileatus have a black crest with rufous edges on the feathers.

It typically forages singly and sometimes in pairs, and very rarely joins mixed-species feeding flocks.

It takes prey mostly by using short upward sallies from a perch to grab it from leaves and occasionally gleans while briefy hovering.

[5][6][9][10][11] The scale-crested pygmy tyrant's breeding season has not been defined but includes March to June in Colombia.

It is made from plant fibers, some of which often dangle from the bottom, and it typically suspended from a twig between about 3 and 5 m (10 and 15 ft) above the ground.

The scale-crested pygmy tyrant's main vocalization is a very loud trill that differs somewhat geographically.

"Given its tolerance of degraded and isolated habitats and its relatively large range, it is thought not likely to become threatened.