The fringe, along with its complex color pattern of small blotches and reticulations, enable it to camouflage itself against the reef environment.

During the day, the solitary tasselled wobbegong can generally be found lying inside caves or under ledges with its tail curled.

Dutch ichthyologist Pieter Bleeker originally described the tasselled wobbegong in an 1867 volume of Archives Néerlandaises des Sciences Exactes et Naturelles.

He gave it the name dasypogon, from the Greek dasys ("hairy") and pogon ("beard"), and assigned it to the genus Crossorhinus (a synonym of Orectolobus).

[4] In 1908, Charles Tate Regan created the new genus Eucrossorhinus for this species, derived from the Greek eu ("well"), krossoi ("tassel") and rhinos ("nose").

[5][6] Regan subsequently reconsidered the main trait he used to separate Eucrossorhinus (the spacing of the fourth and fifth gill slits) and synonymized it with Orectolobus.

Molecular clock estimation placed the speciation of the tasselled wobbegong at 11–6 Ma, coinciding with a period of significant geological rearrangement and the formation of coral reef habitats in the region.

The head is wider than long, with a distinctive fringe of branching dermal lobes running almost continuously from the snout tip to the origins of the pectoral fins, including a "beard" on the chin.

This species has a mosaic-like dorsal color pattern consisting of numerous small, dark blotches and lines on a gray- or yellow-brown background; there may also be darker bands.

[2] The range of the tasselled wobbegong encompasses the continental shelf of northern Australia from Ningaloo Reef in the west to Bundaberg in the east, as well as New Guinea, Waigeo, and the Aru Islands.

[2][8] This common bottom-dweller inhabits coral reefs, perhaps exclusively, in both inshore and offshore waters from the intertidal zone to around 50 m (160 ft) deep.

[8][12] Considered the most specialized member of its family, the tasselled wobbegong's ornate coloration and complex dermal fringe grants it excellent camouflage, while it is probably a slower swimmer than related species.

When it perceives food nearby, it begins to slowly wave its tail back and forth; its caudal fin resembles a small fish, complete with a dark eyespot at the base.

Given this shark's cryptic appearance and poor vision, humans should exercise caution to avoid accidentally harassing it or causing it to mistake a hand or foot for prey.

However, elsewhere in its range it may be negatively affected by extensive fishery activity and habitat degradation from pollution, blast fishing, and coral removal.