This species is a carnivore of dense forest. These bats tend to live near streams and other moist areas in forested lowlands, tropical rainforests, tropical deciduous forests and cloud forests. They have been reported to roost in hollow trees, caves and even Mayan ruins (Medellin 1989, Nowak 1994). There is little known about the mating system of C. auritus (Altringham 1996, Hill and Smith 1984). Big-eared Woolly Bats have low reproduction rates, typically having just one offspring per litter. Females have only been reported to be reproductively active during the second half of the year. Pregnant females, however, have been observed from April until July. This is consistent with a monestrous cycle, varying geographically. One female taken into captivity gave birth to a single young after 99 days. They have a maximum gestation period of 220 days and a maximum weaning time of nine months. The age of reproductive maturity is between one and two years (Medellin 1989, Nowak 1994, Kunz and Racy 1998).

Big-eared Woolly Bats are not exclusively carnivores. In fact, they have a flexible foraging strategy that allows them to eat insects and fruit in addition to extensive consumption of small vertebrates like bats, opossums, mice, birds, lizards and frogs. They have a diet similar to that of Vampyrum spectrum and Trachops cirrhosus. Big-eared Woolly Bats have significant seasonal diet changes. In the wet season they eat more insects because they are more abundant. However, age and sex do not have any effect on what they eat (Hill and Smith 1984, Altringham 1996, Kunz and Racey 1998).

This species occurs from Veracruz (Mexico) south to the Guianas, Brazil, Peru, Bolivia and north Argentina (Simmons 2005). It is also found in Paraguay.

Habitat conservation is recommended. In Mexico, it is listed as threatened under NOM - 059 - SEMARNAT - 2001 (Arroyo-Cabrales pers. comm.). It is found in protected areas.