This largely fossorial species is restricted to chaco-seco (thorn forest) habitats (Meritt 1985), where it occurs in porous, sandy soils (Meritt 2008). Its diet is poorly known, but other members of the genus feed largely on terrestrial termites and ants (Wetzel et al. 2008). It gives birth to a single young (Adamoli et al. 2001). A small number of parasites have been reported for the species (Suare et al. 1998). There is little other available information on its life history and other biological characteristics. No information exists on the age at first reproduction, longevity, or generation length of this species, neither from wild nor from captive populations. The generation length of another armadillo species, the Nine-banded Armadillo (Dasypus novemcinctus), has been estimated to be 5 years. The generation length for C. chacoensis may be similar.

Cabassous chacoensis is endemic to the Gran Chaco of western Paraguay (where its distribution is restricted) and north-central Argentina (Gardner 2005, Vizcaíno et al. 2006, Nellar et al. 2008, Pautasso 2008, Monguillot and Miatello 2009, Tamburini and Briquera 2012, Quiroga et al. 2017, Smith and Ríos 2018). It has not been recorded in Bolivia but has been postulated to occur there (Wallace and Porcel 2010), while an old record from Brazil is considered doubtful (Anacleto et al. 2015).

This armadillo species has been recorded in several Argentinean national and provincial parks (Heinonen Fortabat and Chebez 1997, Monguillot and Miatello 2009, Quiroga et al. 2017, Di Blanco et al. 2020), but has not been confirmed to occur in any protected area in Paraguay (Smith 2012).