Hipposideros stenotis is found in rugged rocky areas, such as sandstone cliffs, escarpments and boulder country, gorges, and waterholes bordered by paperbark trees. It roosts in boulder piles, crevices, road culverts, old mines, shallow caves, and semi-shaded sites along cliff lines, and is usually found singly or in small groups. They forage close to the ground in a range of vegetation types, including eucalypt open forests and woodlands and grasslands, but typically where these are close to escarpments and other rocky areas. The diet comprises small insects, including beetles and moths (Milne et al. 2006, Churchill 2008, Milne and Hall 2008, Milne and Pavey 2011, Woinarski et al. 2014). There appears to be some geographic variation in echolocation call characteristic frequency (McKenzie and Bullen 2012).

Hipposideros stenotis occurs in a series of subpopulations across the Kimberley region of Western Australia, the Top End and the Gulf Coastal bioregion of the Northern Territory, and the Mount Isa Inlier bioregion of north-western Queensland. Within this extensive range it is very patchily distributed (Milne et al. 2006, Milne and Hall 2008, Milne and Pavey 2011). It has been recorded from several offshore islands in the Kimberley region, including Bathurst, Bigge, Boongaree, Coronation, Gibbings, Irvine, Jungulu, Koolan, Lachlan, Middle Osborn, Sir Graham Moore, St Andrew, Storr, unnamed (west of Storr), Uwins, Wargul and Wulalum Islands (McKenzie et al. 1995, McKenzie and Bullen 2012). Interestingly, it is not known from any islands in the Northern Territory (D. Milne pers. comm.).

The species is present in several protected areas where fire management is a priority, but it is not part of a targeted management effort. There has been some management of abandoned mines in the Kakadu area, including consideration of their use by bats. Much of its biology relevant to effective management is poorly known. There is a requirement for further study on broad habitat preference through modelling and surveys, roost site preference and breeding requirements, an estimate of population size, seasonal and spatial patterning of foraging habitat use, a requirement to emphasise the need for targeted acoustic detection on environmental surveys within its range, a need for investigation of population level genetic similarity across its range, and monitoring of known occurrences to confirm suspicions of a decline (Woinarski et al. 2014).