Dromiciops gliroides lives in the temperate-cold Subantarctic forests of southern Chile and Argentina, where it inhabits thickets of Chilean Bamboo (Chusquea sp.) and other native forest species (Mann 1955, Hershkovitz 1999, Rodriguez-Cabal et al. 2007, Martin 2010). In Argentina, it inhabits restricted environments within the Andean-Patagonian forest (Martin 2010). This nocturnal, highly arboreal mammal constructs spherical nests of water-repellant bamboo leaves lined with moss or grass (Mann 1955) or can nest in tree cavities. Nests probably serve to protect the animals from the cold, but when temperatures drop during the winter and food becomes scarce, Dromiciops gliroides will hibernate (Bozinovic et al. 2004). It feeds on several fruits of native plants, larvae and insect pupae (Mann 1955, Rodriguez-Cabal et al. 2007, Martin 2008). The species is the main seed disperser of Tristerix corymbosus (quintral), and contributes to seed dispersal of other plant species in the Andean-Patagonian forest (Amico and Aizen 2000, Amico et al. 2009).

In Argentina, the genus Dromiciops is exclusive to the Patagonian Forests ecoregion, although in Chile its distribution spans other ecoregions. The distribution of Dromiciops was studied by Martin (2010) through analysis of all known localities since its discovery in 1871 and through potential distribution models, and recently reanalysed by Vázquez et al. (2023), who documented over 250 records. Originally described as restricted to the most humid areas with dense vegetation within the Valdivian rainforest, the species has been recorded in most forest types mapped for the ecoregion by Lara et al. (1999), also inhabiting peri-urban areas and plantations of exotic forest species (Martin 2010).

This species occurs in several protected areas throughout its distribution in Argentina and Chile (Martin et al. 2022, Vazquez et al. 2023, Martin and Carmignotto 2024), but some of these areas are poorly implemented and managed (Martin et al. 2022). More research is necessary to determine the impact of the numerous possible threats to subpopulations, especially industrial-scale logging, agriculture, and residential and commercial development.