Its natural habitat is presumably upper montane forest and subalpine scrubland but it has also adapted to forage in rural gardens and secondary forest (Flannery 1995, Armstrong et al. 2015). Nothing is known of its diet or movement patterns. Lactating females have been observed in the Hindenburg Range/Star Mountains in late February (Armstrong et al. 2005) and in May (Flannery 1995), and on Mt Kaindi in June and July. As in other species of Syconycteris, a single young is produced. In other species of the genus multiple pregnancies can follow in close succession, but whether this is true or not for S. hobbit is unknown.

This species occurs in the higher altitude montane forests on the central cordillera of the island of New Guinea (Indonesia and Papua New Guinea). It is known from two well-separated localities in Indonesian Papua and from three main regions of Papua New Guinea (Star Mountains to Telefomin, Western and West Sepik Provinces; Crater mountain area, Chimbu Province; and Mount Kaindi, Morobe Province) but it may also occur in other, poorly surveyed blocks of high elevation forest along the central cordillera between these sites and further to the east and west. It has been recorded between 1,817 and 2,700 m a.s.l. but almost certainly ranges higher to limit of vegetation growth.

This species has been recorded from the Crater Mountain Wildlife Management Area.