Rhinolophus megaphyllus roosts in caves and other analogous underground structures, in colonies of up to 5000 individuals, but more often less than 50. It is generally associated with closed forest habitats and warm humid roosting sites, but has also been recorded from drier vegetation types, rural gardens and plantations. They forage within stands of vegetation and flight is normally slow and fluttery. A wide variety of small insects form their diet. Males tend to be strongly philopatric to roost sites, whereas females will move to maternity sites during breeding. Males store sperm for four months before copulation, but there is no sperm storage by females prior to fertilisation. Females produce a single young, which are weaned after eight weeks by the end of January (Pavey and Young 2008).

This species ranges from the island of New Guinea (Papua New Guinea only; R. m. fallax K. Andersen, 1906), the Bismarck Archipelago (islands of New Britain and New Ireland, Papua New Guinea; R. m. vandeuseni Koopman, 1982); the D’Entrecasteaux Islands (Papua New Guinea; R. m. fallax K. Andersen, 1906), the Louisiade Archipelago (Papua New Guinea; monachus K. Andersen, 1905), and throughout eastern Australia from Cape York to Victoria (ignifer Allen, 1933 and the nominate subspecies; Flannery 1995a,b; Bonaccorso 1998). It occurs from sea level up to 1,600 m Asl. On the New Guinea mainland it can be difficult to detect acoustically because echolocation call frequency is similar to that of R. arcuatus (Leary and Pennay 2011; Robson et al. 2012; K.N. Armstrong and K.P. Aplin unpublished data) and the geographic variation in call frequency in both species has not been documented. Its range has expanded in Victoria, Australia in the past 100 years because of mine adits. In contrast, in southern Australia it's echolocation calls are distinctive and can not be confused with other species.  Its range has expanded in Victoria, Australia in the past approximately 100 years, extending its distribution westwards by over 200 km, through the use of abandoned mine adits (Kerle 1979).

It is present in several protected areas. The protection of underground roosts should be a priority for management, but consideration of the area and quality of foraging habitat around roosts is equally important for maintaining area of occupancy. The addition of gates over mine entrances could have a seriously detrimental effect on colony size, and an inventory of disused mines containing colonies of this species would assist management planning.